House of Fraser has posted “disappointing” Christmas sales and finalised the terms of the sale of the brand names no longer used in the UK to Guangzhou Sunrise Trading Limited for a cash consideration of GBP30m (US$40.5m).
In its Christmas trading update for the six weeks to 23 December, the UK department store retailer said sales in stores declined by 2.9%, while during the Black Friday event, sales in stores grew by 0.8%.
Web sales were down 7.5% in the period but across the Black Friday event were within 1% of last year’s record sales performance.
“In line with the market, sales during the first week of the post-Christmas sale were disappointing, although sales since New Year’s Day have recovered and are broadly in line with last year in both stores and online,” the retailer said in its update.
Meanwhile, the group said its strategy to reduce the volume of discounted products being sold increased gross margins across the business by about 0.5% at constant exchange rates over the festive period.
House of Fraser also announced it has finalised the terms of the sale of the brand names and associated IP of those house brands no longer used in the UK to Guangzhou Sunrise Trading Limited for a cash consideration of GBP30m.
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By GlobalData“We are a business in transition; Our focus is on driving profitability rather than chasing revenue at any cost,” said CEO Alex Williamson. “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.”
He added the investment in logistics and supply chain is beginning to yield dividends and the execution of the group’s transformation plans continues at pace, with GBP10m of the GBP26m per annum goal secured this year, while “good progress” has been made in delivering a further GBP16m, which it says will be secured in 2018.
Maureen Hinton, group retail research director at GlobalData, said the prospect of House of Fraser performing well over the Christmas period looked pretty remote with nothing but bad news coming out about the retailer.
She added: “With such a mixed bag of stores and little that gives them a collective identity (apart from being quiet), House of Fraser needs its Chinese owners to pump in more, and sufficient, funds to upgrade and reconfigure its store portfolio much faster to attract more customers and spending.”
