House of Fraser’s flagship Oxford Street store in London. Online sales accounted for 10.9% of total sales in the year to end of January
A dramatic increase in online sales has helped House of Fraser achieve a 3.3% rise in overall turnover to £1.2bn. However, the store chain continues to struggle to make a profit.
A wider range of products and better delivery options helped boost online sales 53% and accounted for 10.9% of total sales last year, said John King, chief executive of the privately owned department store chain.
Underlying earnings for the year to end of January rose 4.3% to £61.1m. But interest charges and other costs pushed the company into a small pre-tax loss, according to analysts. Although total sales rose, nearly all the growth came online, where costs are higher.
With conditions on the high street remaining tough, House of Fraser did not open any new stores over the year and closed a small outlet, an experimental store in Liverpool designed to help shoppers pick up items ordered online.
Nick Bubb, an independent retail analyst, said: “It’s all very well growing online but, given the costs of distribution of online product, it’s hard to move profits forward if stores are seeing sales under pressure. They are running hard to stand still.”
Don McCarthy, the chairman of House of Fraser, said market conditions had been challenging. “We expect economic conditions to remain subdued and it remains difficult to assess when market conditions will improve. Nevertheless, we are confident that the group’s business model, with our premium brand positioning and strong multichannel operations, is highly relevant to changing consumer habits and are confident that the group will continue to grow and develop for the foreseeable future,” said McCarthy, who owns 20% of the retailer.
The chain, which has 60 stores, cut its debts by £6m to £157m despite ongoing investment in sites including its flagship Oxford Street shop in London.
Once part of the empire of collapsed Icelandic investment firm Baugur, House of Fraser has been the subject of takeover speculation this year. It is rumoured to have held talks on the sale of a stake in the business or stores with unnamed Qatari investors, rival department store John Lewis and Mike Ashley, the billionaire owner of Sports Direct.
Speculation over a possible sale has increased because House of Fraser’s largest investor, Landsbanki, the Icelandic bank which owns a 35% stake, has been offloading assets inherited from Baugur. Landsbanki sold the London toyshop Hamleys in September and a major stake in frozen food store Iceland last spring.