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House of Fraser to relaunch website as ecommerce grows

House of Fraser is set to relaunch its website later this year or early next year, chief executive Nigel Oddy revealed this morning as he announced ecommerce sales growth of 26.8% for the year to January 30.

House of Fraser

House of Fraser

House of Fraser

Ecommerce sales account for 18.9% of total sales, which Oddy said was impressive: “You have to remember that we weren’t even in ecommerce nine years ago. You need to get to a certain level before you reach economies of scale and we have reached that now,” he told Drapers.

He explained that the launch of the new site may be pushed back to early 2017 so that it does not interfere with the peak trading period over Christmas.

“For online, we have been working on improving the customer experience of our website, and what we call ‘buy and collect’, which accounts for 35% of our online orders,” he said. “The top 17 of our ‘buy and collect’ stores now have new customer delivery facilities, which is making a difference.”

It comes as the department store chain reported its first pre-tax profit since 2006. House of Fraser made pre-tax profit before exceptional items of £1.3m and adjusted EBITDA of £66.3m on sales of £1.3bn for the 12-month period.

Oddy explained that the return to profit was the result of a combination of increasing sales, growth in ecommerce, enhancing efficiency and refinancing bonds.

“One factor is sales, which is about getting the mix of high-margin house brands, concessions and wholesale right,” he said, underlining that half of House of Fraser’s business is through concessions, 35% from wholesale and 15% from house brands. The ecommerce business was also expanding.

He continued: “We also continue to look at costs and the most important thing is driving efficiencies across the business. Another thing is the refinancing of bonds which we did last year, which will bring the equivalent of a £5m cash interest improvement benefit for a full year.”

Oddy said he expected the next 12 months to be challenging but that the business remains cautiously optimistic.

“We mustn’t take our eyes off the ball in terms of driving those efficiencies, both in the back of our store sand our supporting offices,” he added.

The firm added a new house brand called Gray & Willow last year, which Oddy said was trading well and it would continue to grow. House of Fraser will also launch another house brand later this year, as well as reintroducing AllSaints for autumn 16.

Oddy said confidence among UK customers had taken a hit, citing British Retail Consortium sales figures and declining footfall, but he believed it was more a feeling of general uncertainty rather than any one thing in particular.

“It’s not just Brexit or the economy – it’s a combination of those things, plus people have been spending more on leisure.”

He confirmed that the first House of Fraser store in China is scheduled to open in Nanjing this September, after Nanjing Cenbest bought the a majority stake in HoF’s parent company Highland Group Holdings in September 2014.

The second store in Xuzhou had been planned for this year but has been pushed back to next May because of upgrades to the Sanpower Plaza, where it will be located. The entrance to the store is to change so that customers can enter directly from the Metro.

Oddy and chief operating officer Peter Gross were in China last week and looked at other locations for stores but he said it is too early to confirm any details.

Oddy said House of Fraser has lots of opportunity in China, despite problems in the local market, thanks to its “aspirational affordable” positioning: “We see ourselves as aspirational affordable not luxury, which appears to be struggling more than the rest in China. We are very much about that middle class shopper.

“If you look at the existing malls in China, one looks much like another. We will be very different to what’s there at the moment,” he concluded.

 

 

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