House of Fraser profit soars under new management

Following a senior team shake-up over the last year, UK department store House of Fraser profit has nearly doubled (pre-tax) from £1.3 million to £3.4 million.

And despite expected volatility in 2017, the retailer has strong ambitions for the coming year, particularly for its online platform, which now accounts for 21.8 per cent of total sales.

Online sales are only expected to grow further after the launch of a new web platform this month, designed to enhance the customer experience, improve margins and allow the group to scale its online operation. Increased investment in the business doesn’t stop there: House of Fraser has completed five store refurbishments in the last fiscal year and has plans to improve the performance of its logistics and supply chain.

However, there are clear areas of weakness for the retailer, with House of Fraser reporting a sales decline in house brands-  and womenswear declining by 0.6 per cent. The retailer is addressing these shortcomings, discontinuing underperforming house brands this fiscal year – GlobalData research carried out in November 2016 identified own brands Criminal, Shabby Chic and Living by Christiane Lemieux as the least popular with UK consumers – and launching a new house brand womenswear offer in autumn 2017.

House of Fraser is not alone in these challenges. Debenhams, which will release half-year results later this week, also plans to cull some of its own-brand ranges. While stocking more third-party brands in place of own-brand ranges may increase footfall, it will certainly dampen profit margins. Not only that, but competitors John Lewis, Asos and Amazon already offer third-party labels with great success – leaving little room for House of Fraser, or Debenhams for that matter, to excel.

House of Fraser seems to have its finger on the pulse – recognising underperforming areas of the business and working to rectify these, while striving to evolve its business in line with changing market conditions. However, the retailer has some significant challenges to overcome amid a difficult trading environment.

  • Emily Stella is an associate retail analyst with GlobalData.

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