The Herald

Online and own brands help House of Fraser to record sales

Department store chain defies downturn with profits of £404m

- MARK WILLIAMSON

HOUSE of Fraser has shrugged off the gloom affecting some retailers to post record sales and profits helped by strong growth in its online and own brand operations.

The department store chain, in which Scots entreprene­ur Sir Tom Hunter has an 11% stake, grew s al e s by 3.3% annually, to £1.2 billion in the 52 weeks to January 26 on a like-for-like basis. This strips out the effect of additional space.

Accompanie­d by a 1% increase in gross profits to £403.8 million, from £399.1m, the sales growth was achieved despite the uncertain economic outlook which has prompted some consumers to curb spending.

The company said its operations in Scotland performed in line with expectatio­ns.

Don McCarthy, chairman of House of Fraser, cautioned: “We expect economic conditions to remain subdued and it remains difficult to assess when market conditions will improve.”

However, the company said it had maintained the strong momentum seen in the second half of 2012 since the year end. Like-for-like sales for the 13 weeks to Saturday April 27 increased by 4.8% annually.

By contrast, Marks & Spencer on Tuesday said it suffered a 4.1% fall in like-for-like sales of general merchandis­e in the year to March 30 as it lost ground in the key womenswear market.

The UK’s biggest clothing chain posted a 5.8% fall in underlying pretax profit to £665.2m.

House of Fraser chief executive John King said the group is reaping the rewards for a strategy in which it has put a big emphasis on d e ve l o p i n g its online presence and on increasing sales of house brands such as Linea and Howick.

The margins achieved on such

We‘

expect economic conditions to remain subdued and it is difficult to assess when market conditions will improve

ranges tend to be higher than those on sales of third-party goods.

Mr King said: “Our award winning multi-channel business has performed exceptiona­lly well and has substantia­l future potential, including internatio­nally.

Our house brands grew significan­tly in the second half of the year and this trend has accelerate­d during the first quarter.

The company said online sales increased by 53% annually in the year to January 26, in which they accounted for 10.9% of total takings.

Sales of house brands grew by 4% annually, and represente­d 14% of the total. The gross profits achieved from House Brand sales increased by 5%, indicating that the company managed to increase margins on these.

House of Fraser highlighte­d particular­ly strong performanc­es by Label Lab womenswear, Linea Weekend and Howick menswear.

While discounter­s like Primark have posed challenges for companies that sell clothes, Mr King said House of Fraser has also benefited from efforts to position the group as a premium department store.

Founded as a drapery shop in Glasgow in 1849, House of Fraser has stores in 60 locations in the UK and Ireland. It has five outlets in Scotland, including a House of Fraser in Glasgow and Jenners outlets in Edinburgh and at Loch Lomond Shores.

A group of investors including Sir Tom took the company private in 2006.

Iceland’s Landsbanki has a 35% stake while Mr McCarthy has 22%.

Earlier this month Qatari investors were reported to be mulling over a bid for House of Fraser which would value it at around £300m.

Asked about the report, the company said it did not comment on rumour and speculatio­n.

 ??  ?? LOOKING SMART: Scottish entreprene­ur Sir Tom Hunter has an 11% stake in department store chain House of Fraser.
LOOKING SMART: Scottish entreprene­ur Sir Tom Hunter has an 11% stake in department store chain House of Fraser.
 ??  ?? IN STORE: Total sales at House of Fraser rose 3.3% to £1.2bn last year.
IN STORE: Total sales at House of Fraser rose 3.3% to £1.2bn last year.

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