Investment: Dowdy show at House of Fraser
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.THINGS DO not look too smart for House of Fraser. The department store group is running hard to stand still in a tough high street trading environment.
It has embarked on a huge restructuring exercise to shed its tweed-and- cardigan image and improve financial returns.
Stores have been jazzed up and new trendy lines have been introduced in an effort to attract younger customers. House of Fraser is also spending more than pounds 20m on an overhaul of its supply chain and distributions systems.
But Ralph Lauren and a new warehouse can do little if the trading environment is against you, as yesterday's interim results show. True, the loss before tax shrunk to pounds 1.8m from pounds 2.5m and margins increased. However, sales were up a pedestrian 2.2 per cent, with turnover in the home division down by more than 2 per cent.
More importantly, management cautioned that sales have slumped in the last two weeks of September and warned that Christmas, when the company makes most of its money, will be anything but a bumper. The shares promptly dropped 2p to 83p, an all-time low.
The main worry is that things could get even worse. If the economic situation deteriorates and consumer spending takes a knock, House of Fraser will suffer more than most of its competitors for two reasons.
First, despite all the recent efforts, the brand name, a key safeguard in times of crisis, is not on a par with other clothes retailers such as Next.
Second, with only 50 stores nationwide, it has a much more limited scope to extract cost-savings than, say, Marks & Spencer.
The shares are undoubtedly bombed out and now trade on a multiple of just nine-times forecast earnings of pounds 30m. But given House of Fraser's gloomy prospects, they should be avoided.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments