'One more mistake and I'll go quietly'

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The Independent Online
Brian McGowan yesterday pledged to "fall on his sword" as chairman of the struggling House of Fraser department store group if the company made any more mistakes.

The promise came as John Coleman, chief executive, admitted that some of the merchandise it was contracted to buy was "crap". This explains why the group has carried forward a large provision to cover stock write- offs this year for merchandise that has yet to go on sale in its shops.

Speaking as House of Fraser announced heavy losses due to large stock write-downs and redundancy costs, Mr McGowan said he would leave the group without compensation if there were any further provisions or if the latest attempt to regenerate the company failed.

"I will fall on my sword if John Coleman doesn't deliver to shareholders," he said. He said if there were any further provisions, then "that would be another reason to take the plunge".

"There is no point in making out that this has been a happy last three years. I can assure you that it hasn't been a happy story for me either."

He said that if he did leave, or was pushed out of the group, he would go without compensation as he had no contract with the company. Mr McGowan was brought in at great expense to chair House of Fraser when it was floated off from Harrods in 1994. But its performance has been undermined by poor merchandise and weak sales. The shares have rarely risen above the 180p issue price since late 1994. Yesterday they closed at 165p, up 0.5p.

The full scale of the stock problems became clear yesterday when it emerged that the company had carried forward a pounds 32.5m provision. This will cover redundancy costs and store disposals but also further stock write-offs. Asked whether this meant that the company had contracted to buy "crap", Mr Coleman replied "yes".

Mr Coleman stressed that House of Fraser now had a new buying team and the new merchandise would soon start to show through.

House of Fraser will launch a new private label brand in the summer which will include men's and women's ranges.

The company recorded a pounds 38.4m loss last year compared to a pounds 14m profit in 1995 due to exceptional cost of pounds 53.2m.

Investment column, page 25