Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Moody's warns on House of Fraser outlook as challenges loom

Credit ratings agency Moody’s has changed House of Fraser’s outlook from “stable” to “negative” in light of the external pressures it faces this year from currency fluctuations and falling consumer spend.

hof china

HoF China

House of Fraser opened its first store in China at the end of 2016

Moody’s pointed out that, despite its positive Christmas 2016 trading update, HoF reported weakening profitability in the first three quarters of its fiscal year, ending January 2017.

Meanwhile, consumer sentiment in the UK is uncertain and sterling’s ongoing weakness is going to drive higher costs of imported products, as well as rising inflation.

“The resultant squeeze on disposable incomes would weigh on discretionary spending,” said David Beadle, vice president – senior credit officer at Moody’s and lead analyst for HoF.

“In these circumstances, we believe HoF would find it difficult to recover to previous levels of profitability and therefore its credit metrics would remain weak for the rating category.

“HoF has debt maturities commencing in mid-2019 and as we typically expect companies to look at refinancing at least a year before major maturities, there is only a limited window for the company to return to historic levels of profitability in order to maximize the cost efficiency of a refinancing.”

Related reading

House of Fraser in good shape for challenging 2017, says CEO

 

 

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.