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House Of Fraser Sees Tough Start To Year

Department store House of Fraser has hailed an improvement in underlying annual profits but saw its bottom line weighed down by finance costs and said it had seen a tough start to the current year.

The 167-year-old business, taken over last year by China's Sanpower conglomerate, said it had edged into the black for the first time since 2006 with pre-tax profits before one-off costs of £1.3m, compared to a loss of £1.6m for the year before.

But when including these exceptional costs – related to a refinancing deal – the company saw a £20.2m loss for the year to 30 January, widening from a £2.9m loss the year before.

House of Fraser said sales of £1.3bn saw an improvement of 4.2% in a like-for-like basis – helped by a strong performance in menswear and accessories – though chief executive Nigel Oddy said the final quarter had seen a "volatile trading environment".

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Revenues were bolstered by a strong performance online, where sales were up 26.8%, while there was only a meagre 0.1% increase at its bricks-and-mortar department stores.

Mr Oddy said the company had seen an encouraging response to spring and summer fashion ranges "despite a slower than expected start to the new financial year as has been documented across the retail sector".

Much of the sector saw a tough Christmas period as mild weather hampered sales of warm winter clothes and there have been warnings that there are more tough times ahead in 2016.

Marks & Spencer (Other OTC: MAKSF - news) last week reported a 2.7% fall in like-for-like sales for clothing and home ware for the 13 weeks to 26 March.

Next (Other OTC: NXGPF - news) said last month that it was facing its most challenging year since the financial crisis.

House of Fraser has been rolling out store refurbishment programmes and is planning to launch a new Australian website later this month. Meanwhile plans for expansion in China continue with the first store there expected to open later this year.