House of Fraser reports robust sales

House of Fraser 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 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.

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