House of Fraser posts record sales in first year under Nanjing Xinjiekou as it ramps up international expansion
House of Fraser's new owners will be toasting their decision to acquire the business, which has revealed record like-for-likes for the year.
The figures
Like-for-like sales at the department store were up 5.8 per cent, with gross total value (GTV) rising to £1.3bn. Profits rose £29.6m to £460.2m while adjusted EBITDA rose seven per cent to £64.4m.
Online sales surged 32 per cent, and now make up 15.4 per cent of total sales. Bricks and mortar growth was more sluggish, but still up 2.2 per cent.
House brands such as Linea and Army and Navy were up 10 per cent, as was HoF's cash margin.
Why it's interesting
HoF has long been the baby bear's porridge of the mid-tier department store world, generally being outperformed by rival John Lewis, while keeping ahead of struggling Debenhams. These figures suggest that trend will continue.
After months of discussion ahead of HoF going public, it was bought by Chinese consortium Nanjing Xinjiekou last year. Chairman Don McCarthy announced his departure almost immediately; chief executive John King followed suite last month.
It will start to trade online in Australia, before launching in China (and other international markets). The first of the three Chinese stores will open in Nanjing next March, followed by one in Chongqing later that year. A third, in Xuzhou, will open in 2017. A second franchise store is planned for Abu Dhabi “shortly”.
That's not forgetting Mike Ashley still owns nearly 10 per cent of the company – whether he will be a silent partner or flex his muscles is yet to be seen.
What they said
The group is planning to “significantly increase the level of investment in our multichannel proposition” as well as to refurbish six stores in the UK.
Chief executive Nigel Oddy said: “We are confident that the group's business model, with our premium brand positioning and strong multichannel operation will ensure that House of Fraser continues to grow and develop for the foreseeable future.
"We are very excited by the future as we embark on the next phase of growth both in the UK and internationally.”
In short
The new Chinese owners will want things to continue ticking over in the UK but the far greater prize will be its growth internationally, particularly in their home country, where at least three stores are planned. This is where the future of HoF will be determined.