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House of Fraser posts ‘disappointing’ Christmas sales

House of Fraser has reported a decline in sales, both in stores and online, in the run-up to Christmas.

Sales in stores for the six weeks to 23 December fell by 2.9%, with web sales down 7.5%.

However, the department store retailer pointed to a 0.8% uplift in store sales during its Black Friday promotional event, with online sales “within 1% of last year’s record sales performance” in the same timeframe.

It added that gross margins were boosted by around 0.5% on a constant currency basis over the festive period, owing to a strategy to reduce the volume of discounted products being sold.

HoF reported that although trading during the first week of the post-Christmas Sale was “disappointing”, sales since New Year’s Day have recovered and are “broadly in line” with last year in both stores and online.

As part of its transformation programme, House of Fraser has made savings of £10m in 2017. It added that “good progress” has been made in securing a further £16m in savings for 2018.

The initiative involves making efficiencies across the business through consolidating suppliers, reviewing distribution centre activity, moving to a single stock pool to service the multichannel business and by leveraging technology outsourcing partnerships with firms CapGemini and Infosys.

Alex Williamson, CEO of HoF, said: “We are a business in transition; our focus is on driving profitability rather than chasing revenue at any cost. We are not a business determined to sell everything to everyone at any price. What’s important, and we are seeing some success in the numbers, is to keep our discipline in selling those products that are loved by customers and profitable for House of Fraser.

“The trajectory of our web business is now back on track following the re-platforming carried out earlier in the year; our investment in our logistics and supply chain is beginning to yield dividends and through the careful curation of our product mix we grew margins over the Christmas period by 0.5%, at constant exchange rates. Let’s not forget we can trade with the best of them too as we delivered another record Black Friday performance.

“The execution of our transformation plans continues at pace, and we are confident that we will deliver an exceptional experience for our customers and brand partners whilst delivering a sustainable and profitable future for House of Fraser.”

Yuan Yafei, chairman of HoF owner Sanpower, added: “As House of Fraser embarks on a year of significant transformation in 2018, we remain confident in its prospects. Sanpower is fully committed to its long-term investment in the UK retail market, and to continuing to provide all the necessary support to ensure House of Fraser’s success as the leading UK premium department store chain.

“We fully endorse the transformation plan that Frank, Alex and the team are delivering to ensure a successful future for the business both in the UK and internationally.”

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