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House of Fraser warns of 'very challenging' trade conditions in latest report

Published 27/09/2016

House of Fraser reported flat sales figures
House of Fraser reported flat sales figures

Department store chain House of Fraser became the latest retailer to warn over high street conditions as it revealed sales woes amid "very challenging" trading.

The group reported flat sales over the six months to July 30 and said trading had worsened since then amid low consumer confidence and the disruption of a store revamp plan.

It posted a 2% drop in sales over the eight weeks to September 24.

Nigel Oddy, chief executive of House of Fraser, said: " We have, like many of our peers, experienced an extremely volatile trading environment since the final quarter of fiscal year 2016, and we expect this uncertain economic situation to remain for some time."

But the group said it was "cautiously optimistic" of a bounce-back over the all-important festive quarter, when it makes around 85% of its entire year's profits.

House of Fraser adds to a mounting list of retailers alerting over difficult high street trading, with John Lewis and Next also recently cautioning over a shift in consumer spending.

Frank Slevin, executive chairman of House of Fraser, said: " The UK retail sector is facing significant change in structural dynamics as consumers shopping habits and delivery expectations continue to evolve."

House of Fraser reported interim sales of £573.5 million, in line with a year earlier, while underlying like-for-like sales edged 0.9% higher, stripping out Virgin Travel concessions.

Underlying earnings dropped sharply to £1.1 million from £9.2 million a year ago, but it said this was largely down to a fall in financial services income. Gross profits nudged up by £2.5 million to £207.2 million.

House of Fraser, which was bought by Chinese conglomerate Sanpower Group for £480 million in 2014, also said it was launching six concessions of toy chain Hamleys - owned by another Chinese group, C.banner International.

C.banner International reportedly said in April it was considering buying a stake in House of Fraser.

House of Fraser's ambitions to launch in China have also been in sharp focus, after a launch in Nanjing is understood to have been delayed.

But the group confirmed its first store will open in Nanjing in late 2016 "as planned", with a ceremony taking place at the end of the year.

It added: "Inspired by our iconic Frasers store in Glasgow, the new store in Nanjing will provide a unique retail experience for the Chinese market, offering a broad range of exciting international and local brands to our customers."

In the UK, House of Fraser has been overhauling five stores over its half-year, which are due to finish by the end of next month or early November, as part of a wider refurbishment.

This will bring the total of stores refurbished to 12 over two years.

House of Fraser is also adding new brands including All Saints, Monsoon and Mulberry to its portfolio.

The group said like-for-like branded and concession sales rose by 2.1% and 1.3% respectively over its first half, excluding Virgin Travel concessions, which it has been scaling back over the past year.

Its House brand sales fell by 3.7%.

Online sales rose 17.8% and now account for more than a fifth - 20.7% - of all turnover.

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From Belfast Telegraph