House of Fraser tackles tough trading

House of Fraser owns Edinburgh store Jenners. Picture: Greg Macvean

The Jenners owner reported flat sales over the six months to the end of July and said trading had worsened since then amid weak consumer confidence and the disruption of a store revamp plan. There was a 2 per cent drop in sales over the eight weeks to 24 September.

Chief executive Nigel Oddy 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 rebound over the crucial festive quarter, when it generates the bulk of its profits.

House of Fraser, which is part owned by Sir Tom Hunter’s West Coast Capital investment vehicle, adds to a mounting list of retailers, including John Lewis and Next, cautioning over UK high street trading.

The interim results showed that House of Fraser booked sales of £573.5 million, in line with a year earlier, while underlying like-for-like takings edged 0.9 per cent higher, stripping out Virgin Travel concessions.

Underlying earnings dropped sharply to £1.1m from £9.2m a year ago, but it said this was largely down to a fall in financial services income. Gross profits nudged up by £2.5m to £207.2m.

Online sales continued to grow, increasing by 17.8 per cent on a like-for-like basis, and now represent just over a fifth of overall revenues.

Frank Slevin, executive chairman, said: “The UK retail sector is facing significant change in structural dynamics as consumers shopping habits and delivery expectations continue to evolve.

“Under the leadership of our strengthened management team we are, however, highly confident in our ability to navigate these changes and position House of Fraser to deliver on our customers’ demands.

“We also believe that there is a significant opportunity to position House of Fraser as a global brand. Whilst we are still at the very early stages of our international expansion plans, we are pleased to be opening our first Chinese store in Nanjing.”

The firm operates from 59 locations across the UK and Ireland and employs more than 6,000 House of Fraser staff alongside 11,500 concession workers.

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