House of Fraser warns of '˜very challenging' conditions

Department store chain House of Fraser has become the latest retailer to warn over high street conditions after it revealed it was facing 'very challenging' trading.
House of Fraser is "cautiously optimistic" of a bounce back over the festive seasonHouse of Fraser is "cautiously optimistic" of a bounce back over the festive season
House of Fraser is "cautiously optimistic" of a bounce back over the festive season

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

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

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Nigel Oddy, the 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 festive trading quarter, when it makes around 85 per cent of its entire year’s profits.

House of Fraser adds to a growing number of retailers who have raised concerns over difficult high street trading, with John Lewis and Next also recently warning 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.”

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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 per cent 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.

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House of Fraser’s ambitions to launch in China have also been in sharp focus, after a launch in Nanjing was 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 be finished by the end of next month or early November, as part of a wider refurbishment.

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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 per cent and 1.3 per cent 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 per cent.

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

House of Fraser has a number of stores across Yorkshire, including outlets in Huddersfield, Hull, Leeds and Sheffield Meadowhall.