House of Fraser (HoF) is cutting around 30 of its womenswear brands and will launch a new house brand for autumn 17, as well as adding new champagne bars and yoga studios to its stores in a bid to position itself as a disruptor in the industry.
The firm is also readying the relaunch of its website and plans to cut back on promotions by reducing stock levels, as part of a plan to refocus on its core consumer.
“We are entering a transformational period across the industry and as department stores, we’re being assaulted from all sides by disruptors – we need to be a disruptor,” said executive chairman Frank Slevin, as he revealed the chain’s new five-year vision on Thursday.
Slevin said the retailer had suffered from insufficient investment over the past 20 years, which had left it on “life support”. But he added that he is optimistic for its future thanks to its long heritage, strong product range and brands, growing ecommerce business, outstanding team and a store estate with “great potential”.
Although he declined to reveal any highlights from the department store’s full-year results, which are set to be announced next month, he did indicate there had been positive progress, prompting a smile from chief financial officer Colin Elliot.
HoF is currently searching for a new chief executive after Nigel Oddy stepped down from his post at the end of last year. Slevin said he was in no rush to recruit due to the strength of the leadership team, which includes Elliot, as well as executive director for buying and design Maria Hollins and chief customer officer David Walmsley, who both joined last year.
Elliot hit back at claims that HoF’s Chinese owner failed to invest some £75m that was promised, underlining emphatically that the reports had a “brief brush with reality”.
He said it referred to a plan from the previous management team, which wanted £55m for a new web platform that they wanted to design and build in-house and £20m for store refurbishment.
“It would have been crazy to build the website in house and we are about to relaunch the site for £25m – less than half the cost,” he said. “We refinanced in August 2015 and raised £50m, which gave us the capital we needed to invest so we didn’t need the money from our shareholder.”
He said the firm had ploughed £90m into the business during the two years following the acquisition in 2014, compared with £30m in the two years prior. It will spend an additional £45m this year, predominantly on IT and opening a new store at Rushden Lakes in Northamptonshire.
He pointed out that Sanpower had not taken any dividends and was happy not to in future, adding: “They cannot take dividends as part of the bank covenant – that’s not what they acquired us for.”
Slevin said the firm will open its second store in China later this year in Xuzhou, following its debut in Nanjing, Jiangsu province, at the end of last year. The third will open in early 2018, although the location is yet to be confirmed.
He said the group is in active negotiations on a number of possible locations in the Middle East with a franchise partner but may also consider launching its own house brands separately, such as Biba, in its own right.
“We could also launch a version of HoF ‘light’ internationally in other places in Asia,” he said, explaining that the team was exploring options for a smaller-format version of its stores.
Slevin is also chairman of toy retailer Hamley’s, which is owned by C.banner, a strategic partner of Sanpower that is run by Yuan’s brother-in-law Chen Yixi, and chairman of US gadget retailer Brookstone, which was also acquired by Sanpower in 2014.
He indicated there could be more synergies within the group, adding: “Hamley’s has an existing footprint in 25 countries – that could give us very neat entry into lots of markets.”
Read more on House of Fraser’s womenswear strategy here.