House of Fraser like-for-likes up 4.8% driven by online sales surge

The retailer narrowed its adjusted EBITDA loss from £3.6m to £3.4m in the quarter, which is “typically the period with lowest level of sales activity and normally produces a small EBITDA Loss”, said House of Fraser.

House of Fraser said current trade has remained strong, albeit growth has slowed to 4.3% on a like-for-like basis in the first 20 weeks of the financial year.

Gross profit rose to £84.8m over the 13 weeks to April 27, which is £3.3m ahead of its first quarter last year. Costs have remained in line with the same period last year - despite inflationary pressures and increased multichannel costs - thanks to operational efficiencies and other cutting measures.

Online sales surged 62%, driven by new developments on its website, including increased product choice with new brands such as young fashion label Superdry.

It has also introduced “True Fit”, a tool that aims to improve sizing and fit by asking customers to enter their measurements and preferences, on around 50 brands. House of Fraser claims it increased conversion rates by six times for customers that used it.

House of Fraser has also extended it Buy & Collect scheme with customers now able to select a nominated day to collect packages, and cut off for next day store delivery has extended to 8pm.

However, the retailer has shuttered its HouseofFraser.com store in Liverpool One. It said its existing Aberdeen store is “trading positively” and that it is on the look at for further locations to open the click and collect stores.

Meanwhile, it has also revamped its mobile site and iPhone app to improve functionality.

House of Fraser said: “We expect economic conditions to remain subdued, 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.”

Sales were up across house brands, which rose by 10%, and branded products and concessions, which both saw a 4% rise.

The 63-store retailer also reported a strong performance from recently refurbished stores, with like-for-likes at Oxford Street up by 8.1%.

Homewares was the best performing house brand department and a new range, Living by Christiane Lemieux, was launched across 21 stores and online during the quarter. Owned branded womenswear also performed well, with young fashion range Label Lab showing growth of 39.6%.

In the coming year, House of Fraser intends to refurbishment the womenswear departments at its Manchester and Glasgow stores and these will become model stores for the estate. Lincoln and Grimsby will also see revamps in homeswares, shifting to a mostly house brand offer.

Independent analyst Nick Bubb said: “House of Fraser is doing a very good job with its website and service/delivery proposition, driving better than budgeted 62% online sales growth in Q1, which is a standout performance in the industry.

“The problem is that store like-for-likes are under pressure and the negative operational leverage in ‘bricks and mortar’ is holding back overall profit progress.”