House of Fraser bucks Christmas retail trend

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The Independent Online

Department store House of Fraser has beaten rival John Lewis by posting an 8.5 per cent rise in underlying sales over the festive period – the second year running it has broken records.

While both House of Fraser and John Lewis had been performing strongly before December, their storming Christmas trading suggests that department stores benefited from offering a "one-stop-shop" as consumers cut down on their shopping trips during the cold snap. A number of listed retailers, from the maternity specialist Mothercare to the entertainment and book retail group HMV, blamed the dreadful snow for profit warnings last week.

House of Fraser, which has 61 stores in the UK and Ireland, delivered an 8.5 per cent surge in like-for-like sales for the five weeks to 8 January, compared with 7.6 per cent growth at John Lewis over a similar period. The spotlight will now fall on the department store group Debenhams, which updates on Christmas trading today.

John King, the chief executive of House of Fraser, described its performance as "great", as the retailer was up against another record Christmas last year – as well as the severe weather conditions.

He said: "The snow did impact us. We would probably have had a double digit number if was not for the snow."

He added: "Department stores are clearly a good place to shop whatever the weather and you certainly saw that in the big shopping centres and conurbations. We are a one-stop-shop."

The star performers were House of Fraser's own-label brands, including Biba, Kenneth Cole and Linea, which grew sales by more than 50 per cent over the period. This helped the retailer deliver an uplift of 30 basis points in gross margins, the difference between the price at which a company buys stock and that it sells it for.

In addition to strong sales of men's merino wool jumpers, luxury handbags, such as Mulberry, Gucci and Prada, were also in hot demand. House of Fraser sold 10 handbags a minute in the run-up to Christmas.

Mr King said: "A key point of difference with some of our competition is the range of brands we are able to offer and that is reflected in our sales."

House of Fraser's website also gave its Christmas trading a shot in the arm by posting sales growth of 120 per cent.

Don McCarthy, the chairman of House of Fraser, said: " I am confident that the business will deliver its plans for the remainder of the financial year, and we are well placed to continue to grow during 2011."

Mr King said that House of Fraser's growth had been across the country. While he said the south of England had been "pretty resilient", House of Fraser also enjoyed sales growth of about 20 per cent at Sheffield's Meadowhall shopping centre and at its branch in Carlisle. However, he said for the wider retail industry in the year ahead "there might be some regional differences in areas that might be more affected by the public sector job cuts".

But he does not think the rise in VAT to 20 per cent last week will lead to a fall in demand. Mr King said: "We don't see VAT as a major issue."

Founded in 1849, House of Fraser delivers annual sales in excess of £1.25bn.

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