Store group House of Fraser 'positive' on prospects

Department store group House of Fraser forecast “satisfactory” half-year results today after benefiting from improved sales and cost savings.

The company, which has 46 UK stores, said it remained positive about its prospects following a 0.4% improvement in sales value for the first 19 weeks of its financial year – covering the period to last Saturday.

With a business review recently identifying cost savings of £13m (€19.5m), the owner of Rackhams and Army & Navy said margins were up 2.5% on a year earlier.

The update, which was delivered ahead of the company’s annual general meeting, comes three months after House of Fraser reported an 11% rise in annual underlying profits to £27m (€40.6m).

Analysts expect an improvement to around £29 million in this financial year.

Today’s like-for-like sales figure is broadly in line with the trend reported by House of Fraser for the first seven weeks of the period and comes at a time of intense competition on the high street.

In his AGM statement, chief executive John Coleman drew encouragement from a strong store opening programme with a new outlet due at Croydon in September, followed by three more openings at Dublin, Norwich and Maidstone.

He said: “Given the continued improvement in trading and the expected benefits from the new store openings, the company remains positive on its future prospects.”

Mr Coleman added: “We are pleased with the current trading performance with continued growth in both sales and gross margin. The work undertaken to manage costs has continued successfully.”

The drive on cost savings has concentrated on more efficient operating practices, while the company has also benefited from less stock overhang than in previous seasons.

Previous results from the group have also benefited from higher than normal rates of return from outlets opened in the last few years, including at Bluewater, Nottingham and Reading. Other locations for the chain include Cardiff, Manchester, Hull and Glasgow.

The company is due to publish results for the 26 weeks to July 31 in September.