The retailer launched a GBP25m upgrade of its e-commerce platform in April, aimed at enhancing the customer online experience, significantly improving e-commerce margins, and doubling online sales

The retailer launched a GBP25m upgrade of its e-commerce platform in April, aimed at enhancing the customer online experience, significantly improving e-commerce margins, and doubling online sales

The GBP25m cost of re-platforming House of Fraser's ecommerce business, along with significant discounting, took their toll on first-half profits at the department store retailer.

For the 26 weeks to 29 July, the company swung to an adjusted EBITDA loss of GBP8.6m (US$m), compared to a profit of GBP0.9m in the same period last year. The retailer blamed its web re-platforming and the transformation of its womenswear house brand for the decline.

Gross profit also slipped, falling to GBP196.9m from GBP207.2m in the prior year, with House of Fraser again blaming the web disruption and the clearout of legacy womenswear house brand stock. Total group gross transaction value (GTV) for the period was GBP545.8m, while like-for-like sales declined by 5.2% against last year.

Meanwhile, the disruption to the ecommerce business saw online sales fall 9.8%.

The UK department store retailer launched a GBP25m upgrade of its e-commerce platform in April, aimed at enhancing the online experience, improving e-commerce margins, and doubling online sales.

The new system, which House of Fraser says leverages a range of "world class" cloud based technologies, is said to be working well and delivering the expected benefits to operational performance. However, web sales were significantly disrupted immediately after the launch as the new platform took time to stabilise. The group expects it to be trading normally by the beginning of the fourth quarter.

Meanwhile, the launch of the new womenswear house brand range has been completed,with five existing labels terminated and the remaining four re-launched alongside the group's new Issa brand.

In addition, the retailer's GBP18m investment in its distribution centre is said to be progressing well and is expected to deliver GBP5m of efficiency savings in the second half of the year, rising to a run rate benefit of GBP15m of efficiency savings by the time the project completes in mid-2018.

CEO Alex Williamson, who joined the company on 31 July from luxury sporting estate The Goodwood Group, said he has "high expectations" for the business.

"My observations after a few weeks are that since Sanpower acquired the business in 2014 the primary focus has been on stabilising an enterprise that had been starved of investment for many years," he said. "Whether it be refinancing the business, the investment of over GBP100m in capital expenditure since the acquisition or a root and branch upgrade of the executive team, much has already been done to prepare us for significant transformation."

Sofie Willmott, senior retail analyst at GlobalData, says that with online pureplays such as Amazon and Asos "innovating and improving the customer journey at a rapid pace, House of Fraser cannot afford to fall further behind while waiting for the new platform to bed in."

Meanwhile, with the mid-market squeezed and key players such as M&S and Next struggling to achieve growth, Willmott adds House of Fraser must ensure its product range is "relevant, trend-led and demonstrates value for money to drive appeal in a competitive market."

Last month, House of Fraser opened its first sustainable store in Northamptonshire, at a cost of GBP12m (US$15.4m).

House of Fraser opens first sustainable store