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House of Fraser holds back Christmas discounting

House of Fraser has said it will not go on full Sale in the run-up to the crucial Christmas trading period, after revealing like-for-like sales were on an improving trend and stock levels were down.

The department store, which said this week that like-for-like sales were up 1.3% over the six weeks to September 5 said it will do less discounting than last year. House of Fraser has factored four Mega Day Sales into the calendar year, which will run alongside the traditional high street discounting dates.

The strategy contrasts with the discounting bloodbath experienced across the high street in the run-up to Christmas last year when sales plummeted and margins slumped. House of Fraser engaged in a discount war with Debenhams and Marks & Spencer in an attempt to capture as much of what little consumer spend was available.

House of Fraser, which said first-half margins rose 18 basis points, met with its concessionaires last week and confirmed it would not run 20%-off discount days outside the planned four. Like-for-like stock levels dropped 19%, which means it is under less pressure to clear product.

Chairman Don McCarthy said the 62-store retailer, which launched a promotion offering up to 50% off on December 11 last year, would not repeat the initiative. He added: “Our plan is not to run any promotional activity between now and Christmas.”

But McCarthy conceded if concession partners went into Sale early this Christmas via their high street stores, then House of Fraser would be forced to react. “Our intention is to hold our Sale until after Christmas, but we can’t stop concessions from discounting on the high street,” said McCarthy. “This year, we are clearer about the type
of promotion and it will be much
more planned.”

Chief executive John King added: “We are doing less discounting than last year.” He said that House of Fraser will do more marketing activity in stores at full price.

The strategy will be welcomed by independent retailers, which have seen their market share eroded by discounting in recent months.

House of Fraser also said it would increase the proportion of own-label product from 9% to 30% of the total mix. King said the decision would not affect concessionaire floor space or its buying budgets for brands.

House of Fraser half-year results

In the 26 weeks to July 25

Like-for-likes fell 2.7%

Retail EBITDA rose 16.3% to £10.7m

Gross margin rate was 35.7%, up 18 basis points

Group net debt down £21m to £293.9m – £100m ahead of plan

E-commerce sales rose 60%.

Menswear, accessories and beauty traded ahead of last year

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