House of Fraser '˜optimistic' despite tumbling into red
Jenners owner House of Fraser has given an upbeat outlook despite its earnings coming under strain after the launch of a new web platform and 'significant discounting'.
Interim results for the department store chain revealed an underlying loss of £8.6 million, compared with a slender profit of £900,000 the year before.
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Like-for-like sales fell by 5.2 per cent after takings were impacted by the web disruption and hefty price cutting on old stock to pave the way for a new womenswear brand.
Online sales were down almost 10 per cent for the period as the roll-out of the new £25m online sales platform took its toll.
However, the group said it was optimistic about an upturn in its fortunes during the final quarter, as the impact of launching the new online platform and womenswear range was largely behind it.
Chief executive Alex Williamson, who joined the retailer earlier this year, said: “House of Fraser has many wonderful qualities and I have high expectations for the business.
“My observations after a few weeks are that since [Chinese firm] Sanpower acquired the business in 2014 the primary focus has been on stabilising an enterprise that had been starved of investment for many years.
“Whether it be refinancing the business, the investment of over £100m in capital expenditure since the acquisition or a root and branch upgrade of the executive team, much has already been done to prepare us for significant transformation.
“And House of Fraser has much to be optimistic about. Our new house brand womenswear collections for autumn/winter have been launched and our customers’ response to date has been very encouraging.
“Our new web platform greatly improves our customers’ experience and online margins whilst our investment in the distribution centre will deliver cost savings through improved operational efficiencies.”
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There was no mention of the Brexit-related pressures that rival John Lewis highlighted last week when it reported a slump in profits.
House of Fraser, whose core UK business remains part-owned by Sir Tom Hunter’s West Coast Capital investment vehicle, said: “With the impact of the ecommerce re-platforming and legacy womenswear house brand clear out now largely complete, underlying trading going forward will reflect the general market conditions experienced by the wider retail industry.”
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The group employs some 5,000 people, with thousands of additional concession workers, and has 59 department stores in the UK and Ireland.
Its results came as official figures showed that UK retail sales jumped in August as shoppers continued to spend despite strong price rises. Sales were up 2.4 per cent on this time last year, exceeding the expected 1.1 per cent rise.