Tough outlook as House of Fraser books jump in profit

● Jenners owner warns of continued volatility in sector ● Total revenues flat but like-for-like sales nudge higher

Department store chain House of Fraser has warned of a volatile trading outlook after booking a jump in fullyear profits despite flat sales.

Results released yesterday by the group, which owns Jenners in Edinburgh, showed that pre-tax profits before one-off items grew from £1.3 million to £3.4m in the year to 28 January.

Online trading delivered a 16.1 per cent year-on-year increase in sales and now accounts for more than a fifth of total takings.

Overall revenues were flat at £1.3 billion, while like-for-like sales, excluding VAT, edged up 0.9 per cent in the period.

However, the chain – which is majority owned by Chinese conglomerate Sanpower Group – warned that the “volatility” it experienced last year had continued into 2017.

“The volatility experienced throughout fiscal year 2017 has continued into the current financial year,” it noted. “Whilst trading remained subdued in February, as witnessed across the retail sector, the group saw significant improvement in March.”

The group said five underperforming “house brands” would be discontinued this year, with the focus moving to the most popular ones.

House of Fraser – which can trace its roots back to Glasgow in the 1840s – continued to pump money into its store portfolio during the year, including the completion of five refurbishments in Belfast, Chichester, Darlington, London Victoria and Shrewsbury.

The group recently opened its first standalone shop in China under a plan to build its brand in the Asian powerhouse. It is setting up shop in Sanpower Plaza in the commercial zone of Nanjing, capital of Jiangsu province.

Frank Slevin, executive chairman, said: “The retail environment is changing and we must continue to innovate, challenge and strive to be what our customers want us to be. The strengthened leadership team have meticulously reviewed every part of our business and have set out a clear vision for the future direction of the business.

“It is important that House of Fraser leads in providing the space and experience that attracts our customers to come and spend time in our stores, to make shopping with House of Fraser a lifestyle-led experience.

“With great teamwork, newly refurbished stores and a greatly improved web platform, I am confident that the group has the solid foundations to deliver long-term growth and sustainable profitability over the coming years.”