New House of Fraser management boosts sales and profits
Thursday 21 August 2008
House of Fraser has delivered a healthy uplift in sales and profits, as the changes made by its new management team bear fruit despite tough trading conditions on the high street.
The 61-department store chain, which was acquired by a consortium led by the Icelandic investment group Baugur in November 2006, delivered total sales up 2.9 per cent for the 26 weeks to 26 July.
The figures suggest House of Fraser is holding its own on the high street, against rivals such as Selfridges and John Lewis, but it did not provide like-for-like sales, based on stores more than a year old, and its sales were boosted by two stores opening in Belfast and High Wycombe in March. House of Fraser said that its underlying earnings (Ebitda) were up by more than 30 per cent in the past 12 months.
Robert Clark, a senior partner at the market research firm Retail Knowledge Bank, said: "I suspect it masks a small fall in like-for-like sales. But the profit figure is reasonable and this shows they are watching costs very carefully."
House of Fraser said the uplift in profits and sales had been driven by refurbished stores, improved stock management, the introduction of new products and high-margin private-label products, including its Linea line, which has been extended into handbags, accessories and home. It said it had reduced stock levels by 5 per cent and cut back on poor-selling stock significantly. House of Fraser said that sales at its 13 refurbished stores are 8 per cent ahead of the rest of the chain.
Don McCarthy, House of Fraser's chairman, said: "Our three-year investment programme is well under way, and we are delighted by the performance of our new stores which were opened earlier this year in both Belfast and High Wycombe."
House of Fraser, whose chief executive is John King, said it had invested £150m in the business since it was bought by Highland Acquisitions in November 2006 and that it had repaid or cancelled £110m of the original debt since then.
The department store chain, which generates annual sales in excess of £1.25bn, is to open two more stores in Bristol next month and London's White City in October.
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