Respectable results for House of Fraser

The powers that be at House of Fraser might be feeling a little smug today, writes Deirdre Hipwell, retail and M&A editor at The Times. After enduring a torrid few months during which chief executive Nigel Oddy resigned amid speculation of a rift between the UK management team and Yuan Yafei, House of Fraser’s mercurial Chinese billionaire owner, the retailer has actually managed to pull off a fairly respectable set of results. In a challenging period for the sector, House of Fraser has recorded sales of £1.3bn with like-for-like sales growth of 0.9% in the year to 28 January. Comparable sales growth of just shy of 1% might seem rather anaemic but it is commendable given that the retailer’s first three quarters were pretty dire. Colin Elliot, the chief financial officer who has been running the retailer while it looks for a new boss, said its full-year performance had been saved, or “come good” to use his own words, by a strong bout of trading in the fourth quarter. November was so strong that like-for-like sales were up by more than 4% while a good Christmas helped too. Overall a rise of 2.2% in like-for-like sales in the final quarter meant House of Fraser ended the year with positive sales. A strong end to the year, where pretax profits also rose from £1.3m to £3.4m, would seem to indicate that House of Fraser is starting to get things right from its product range to the ease of transacting online. It still has a long haul ahead of it, however. Department store retailers in Britain are under more pressure than ever before to maintain relevancy in a retail world that is being structurally transformed by demanding, capricious customers and the growth of online sales. Paula Nickolds, the managing director of John Lewis, arguably still the nation’s favourite department store, said recently that she was well aware that she was taking on her new role at a time of “profound structural change” in the sector. And Debenhams is expected to unveil a host of in-store measures to help boost its trading for the long term when it reports its full-year results on Thursday. House of Fraser is having to adapt to survive along with the best of them. This is why it has been investing in its stores, improving key sales areas such as its beauty halls, introducing new services its stores, and relaunching its website, which recorded a rise in sales of more than 16% last year. The retailer also recently announced plans to reduce its “home brands” from nine to five while improving the cost-efficiency of its infrastructure and it is expected to invest a further £40m to £42m this year in the business. There was no news today on who House of Fraser’s new chief executive will be but Frank Slevin, the retailer’s smooth-talking chairman, said he expected to make an announcement by the end of the month. Mr Slevin was also keen, as ever, to scotch these persistent rumours that the House of Fraser UK management team find it hard to work with the cigar-chomping Mr Yafei. The chairman said that talk about Mr Yafei’s unwillingness to invest in the business was nonsense. He said that House of Fraser didn’t need any help from its owner as it had its own resources, which it had been effectively investing for future growth. In fact, such is the apparent Anglo-Sino love-in at House of Fraser that the last full committee meeting was held in Nanjing where, according to Mr Slevin, there was “a very collaborative level of engagement” on display. That, of course, remains to be seen but with House of Fraser talking about “cautious optimism” for the year ahead, it seems as if the department store has a little more perk in its step.