House of Fraser’s own-brand ranges fell short of sales expectations during the Christmas trading period, according to the retailer’s chief executive Alex Williamson.
His comments come after House of Fraser reported earlier today that it experienced a decline in sales across the business, 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%
Williamson told Drapers that while brand and concession businesses performed “solidly” with sales “more or less flat year on year”, its own-label ranges underperformed in the six weeks to 23 December. No further detail was given on specific figures.
He described it as an “interesting [if] frustrating scenario” in terms of fashion sales during the Christmas trading period.
He explained: “We made a number of adjustments to house brands in terms of fashion and home this year, but in truth we haven’t made all the progress we’d liked to have made, and house brands have fallen short of expectations in this key period. So we’ve got a load of work to do to sort that out – we’re very committed to our house brands but it’s frustrating we didn’t get all of our decisions right.
“On our womenswear house brands, while we created growth on an individual brand-by-brand basis, the growth wasn’t sufficient to cover the width we lost by removing the house brands that we did at the beginning of the year.
“Therefore going into this key trading period, we didn’t have the width we needed to [deliver] the numbers we’d anticipated. That was a mistake that we’re going to fix and we won’t be making it again. It’s an example of where we did the right thing, but didn’t get it quite right.”
Drapers previously revealed that the department store planned to shrink its womenswear portfolio by axing a number of in-house brands including Therapy, Dickins & Jones, Gray & Willow and Episode. Its current own-brand offering includes Linea, Biba, and Maison de Nimes.
House of Fraser also reported earlier today in its Christmas trading up that gross margins were boosted by around 0.5% on a constant currency basis over the festive period, in line with a strategy to reduce the volume of discounted products being sold.
In response to this Williamson said: “We can’t kid ourselves that we can compete solely on price. What we’ve got to be is really focused on profit and not just chasing revenue for the sake of it.
“We’ve been able to slightly grow our margins over this key period, and in our [turnaround] programme we’re starting to see the outcomes of some of the initiatives we’re taking.”
HoF said 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.
Following the news that the department store has approached an unspecified number of landlords for rent reductions, Williamson confirmed it has “been in conversations with all our landlords for many months” on a “mix” of different agreements, on a store-by-store basis.
He said: “[Property is] the second largest cost we have in the business after payroll. We’re working with them consistently, bringing them in as partners as we look to make sure we have the right-sized stores in the right locations to deliver the right experiences for customers. It’s a common-sense thing to do.
“It’s all to do with making sure over the next five to 10 years that we have the right-sized portfolio.”
He added that there “are absolutely no CVA conversations going on”.
On market conditions, Williamson noted: “The key to being a successful business in 2018 – there’s no perfect model – is about making sure we’re agile and adaptable enough to whatever comes our way.
“It’d be really easy to label the market as challenging for a variety of well-publicised reasons, but we’re just focusing on being brilliant for customers and [providing] a variety of product at the right price that can’t be found anywhere else – and they’ll come because we’ll offer them the experience they want in markets that are really important.”