Trading StatementCHRISTMAS TRADING UPDATE, 8th January 2009
House of Fraser, which was acquired by Highland Acquisitions Ltd in November 2006, today reports robust growth for the key Christmas period. Despite difficult retail conditions, total sales for the last five weeks to 3rd January 2009 were up 4.5% on the same period last year, with like-for-like sales down 1.5%.
Gross profit was up on the same period last year, however, marketing activity was more aggressive in response to tougher high street conditions. In addition, House of Fraser has continued to improve its stock management with inventories having been reduced by a further 10% compared to the same period last year. Terminal stocks are significantly down on the year.
Commenting on the performance, Don McCarthy, Chairman of House of Fraser said:
"There is no doubt that the retail sector has experienced one of its toughest years to date. However, our performance over the Christmas period was positive and we are satisfied with the robustness of our business.
2008 was a busy year for us with a heavy store opening and refurbishment programme, as well as a major Head Office move.
The management team and staff have done a great job during the year both from a financial and retail perspective and I would like to thank them, our business partners and suppliers for all their hard work and support over the past year.
The outlook for 2009 remains challenging and we will continue to focus on managing our business accordingly so that our positive performance can continue throughout the new year. However, we do anticipate changes to our brand portfolio, as underperforming brands will leave our business and brands that are performing well will grow alongside new brands introduced during the year."
House of Fraser anticipates being in a strong position at the end of its financial year. The Group has cash deposits in excess of £85m and has an available working capital facility of £100m. This banking facility was undrawn for most of last year and is typically needed over the period when House of Fraser builds up its stocks ahead of the important Christmas trading period. Last year the maximum working capital requirement was £20m. Capital expenditure for 2009 has been reviewed and, with no new major projects, the pressure for capital is greatly reduced.
The business remains fully compliant with all of the conditions contained within its banking agreements and its working capital facility remains available for use.
House of Fraser continues to re-pay its banking facilities ahead of schedule and on 2nd January 2009 repaid £34.5m, representing the full repayment of another of its ring-fenced facilities. This means that it has repaid and or cancelled over £140m of its facilities arranged at the time of the acquisition.
The Group continues to focus on managing its cash resources using appropriate and safe treasury policies and continues to take sensible actions to improve its cash flow in what will be a challenging year for all retailers.
Gavin Anderson & Company 020 7554 1400
Fergus Wylie / Clotilde Gros
About House of Fraser
House of Fraser is a department store group with 62 enviable locations across the UK and Ireland. As one of the best known names on the high street, House of Fraser has presented customers with an unrivalled nationwide department store for more than 150 years. The company was acquired by the Highland consortium in November 2006 marking the beginning of an exciting new chapter in its history. Renowned for its designer brands and exclusive collections, House of Fraser offers luxurious items at affordable prices. From beauty essentials to home accessories, the premium department store strives to offer its customers an enjoyable and pleasant shopping experience. The group has annual sales in excess of £1.25bn and employs 6,500 House of Fraser staff and 10,000 concession staff through 5 million square feet of selling space. Customers can shop at House of Fraser from http://www.houseoffraser.co.uk