House of Fraser shares leap as profits double

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SHARES in House of Fraser rebounded yesterday after the department store group reporting a near doubling of profits last year. The retailer, which has 51 stores, reported pre-tax profits after exceptional items of pounds 28.3m in the 53 weeks to 31 January, up 91 per cent from the previous year and within analysts' expectations.

Its shares surged by almost 10 per cent, closing up 14.5p at 170p after a poor performance so far this year. The shares last week fell to 150p, their lowest level for over a year.

The retailer is in the middle of a big recovery programme to improve profits after struggling since the Fayed brothers, owners of Harrods, floated it in 1994 at 180p a share. Profits before exceptionals were pounds 29m against a loss last time of pounds 38.4m. Sales rose to pounds 812m from pounds 781.4m. The dividend was held at 5.5p a share.

Brian McGowan, chairman, said the company had been successful in meeting its targets and expected to continue this progress in the current year.

"We are confident both of maintaining good sales growth in the current year and of achieving further increases in gross margin and gross profit," Mr McGowan said.

Retail analysts said the leap in the share price was more of a reaction to positive comments by the group on current trading.

"The shares have bounced because of the reassurance on current trading," said Nick Bubb, retail analyst at SG Securities.

John Coleman, chief executive, said the group's performance showed the recovery was on track: "I would like to point out that our womenswear sales were up 20 per cent last year. We are very confident about how our fashion wear is trading right now." House of Fraser's own-bought fashions, as opposed to branded concessions, were up 11.6 per cent.

Mr Coleman said the reopening in late April of the revamped Barkers department store in Kensington, Londonwould usher in House of Fraser's move into the next century.