House of Fraser posts first profit in a decade

 
Catherine Neilan
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The venerable retailer was bought by Chinese conglomerate Sanpower in autumn 2014

House of Fraser has posted a return to profit for the first time since 2006, as the venerable department store business goes from strength to strength under its Chinese parent.

The figures

Sales were up 4.2 per cent to £1.3bn for the year to 30 January, with online sales up 26.8 per cent. They now account for 18.9 per cent of total sales.

Bricks and mortar was still in growth, however, with like-for-likes up 0.1 per cent.

Gross profits were up 5.2 per cent on last year to £484.9m, while pre-tax profits reached £1.3m - the first time House of Fraser has recorded a profit since 2006.

Adjusted Ebitda increased by three per cent to £66.3m.

Why it's interesting

House of Fraser has now been owned by Chinese conglomerate Sanpower (also known as Nanjing Xinjiekou) for nearly two-and-a-half years and after a flurry of change, including the departure of chairman Don McCarthy and chief executive John King, has settled into a period of strong performance.

This is the second strong set of full year figures posted under Sanpower and the signs are encouraging. Having made a profit for the first time in a decade, while others on the high street are struggling to keep up with previous years, is no mean feat.

Just look at Marks & Spencer, where clothing declines continue to plague the business.

What House of Fraser said

Chief executive Nigel Oddy said profit was "driven by continued progress across both our online and bricks and mortar stores, despite the volatile trading environment in the final quarter of fiscal year 2016".

He added: "The response to the launch of our SS16 collection has been encouraging despite a slower than expected start to the new financial year as has been documented across the retail sector.

"Looking ahead, whilst mindful of ongoing uncertainty around the EU referendum and the challenging market conditions experienced across the retail industry since the beginning of 2016, we remain cautiously optimistic and believe we are well positioned to deliver further growth in the year ahead.”

In short

House of Fraser is looking stronger than it has done for years.

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