House of Fraser sales plummet under Chinese owner
The global ambitions of House of Fraser’s new Chinese owners have fallen flat, management is disgruntled and profits have dived nearly 50 per cent in the first half year.
That’s the analysis of Verdict Retail senior analyst Emily Stella, who says the department store’s fate is “being closely watched”.
Unseasonable weather and consumer uncertainty were factors in the decline, she adds.
But the news is not all bad.
“House of Fraser has reported a positive set of results for the Christmas period: the beauty category performed particularly well, with an increase in gifting and the onset of party season. [In the UK] House of Fraser’s Black Friday results were also commendable, with sales rising 2.7 per cent on last year – driven primarily by strong online demand, which represented 41 per cent of total sales across the week-long event.”
After repeated postponements, House of Fraser opened its first standalone store in China in Sanpower Plaza in Nanjing in December. The company is owned by Chinese conglomerate Sanpower Group, whose affiliate C.banner International owns British toy giant Hamleys, which has opened a store in the same centre.
House of Fraser chairman Frank Slevin said at the opening that the chain will look to benefit from the strong demand by Chinese consumers for UK brands.
Meanwhile, Stella says the retailer has rightly invested in refurbishing its existing UK stores.
“These stores have been the retailer’s top performers over the Christmas weeks and supported like-for-like sales growth. Continued investment in its online platform and store estate, as well as offering consumers a broad range of brands will be critical as the retailer faces tougher market conditions in 2017.”
The true performance of House of Fraser over Christmas will be able to be assessed when rivals M&S, Debenhams and John Lewis reveal their results tonight, providing a benchmark for all.