Compared to its bigger and more high-profile department store peers, Debenhams and John Lewis, House of Fraser is out of the public limelight, but it is still a major player in the branded premium end of the fashion market.

Compared to its bigger and more high-profile department store peers, Debenhams and John Lewis, House of Fraser is out of the public limelight, but it is still a major player in the branded premium end of the fashion market.

Forgotten? House of Fraser was publicly quoted until 2006, when it was taken over by the ill-fated, Baugur-led Highland consortium, and its rather uncertain shareholding structure is not helpful to its cause. But its bondholders are provided with quarterly financial updates, so House of Fraser is certainly not forgotten to them and it is not forgotten to the customers of its 61 stores and online operation.

Hero? Well, that is putting it a little strongly, because, if truth be told, House of Fraser is not very profitable and it has a hefty interest charge bill. But chief executive John King and his team have done a good job of updating the business and differentiating it from its rivals.

Three years ago it was commonly thought that its old adversary Debenhams was plotting a takeover move for House of Fraser, on the basis that House of Fraser’s debt and property liabilities would drag it under, in the aftermath of the credit crunch. Yet House of Fraser has survived and it has got its balance sheet into better shape. It has also invested in store revamps, with the former DH Evans store on Oxford Street a much improved showpiece for the business (sales are said to be running 10% up since the completion of the refurbishment, with impressive new shoe and beauty floors).

And House of Fraser is pushing hard with its multi-channel operation. Without electricals and household departments, it is hard to compete with the massive scale of the burgeoning John Lewis online business, but House of Fraser’s focus on fashion, beauty and accessories is similar to Debenhams’ and it appears to be growing faster, with sales up by 60% over its first half. Online sales are now nearly 10% of the total, reflecting the investment that House of Fraser has put into its order delivery and collection service and its website.

It is an unfortunate fact of life that multichannel sales bring multichannel costs, and that is partly why House of Fraser is not making as much profit progress as it would like, but it deserves credit for identifying such online-related costs as a line item in the P&L, and no doubt economies of scale will kick in soon. Meanwhile, rent reviews continue apace, and House of Fraser will soon need to review the profitability of its ‘tail’ of stores in an increasingly multichannel world, but it is by no means alone in that.

At least the top line is moving in the right direction. House of Fraser has a reputation for reporting LFL sales for the most favourable trading periods, but it is hard to argue with its 4.6% LFL sales growth over the past eight weeks. The temporarily extended Sunday opening hours may have helped, but the main drivers would be online sales of the new autumn fashion lines, plus the store revamps. And the extremely autumnal weather we are now suffering is in stark contrast to the ‘Indian summer’ we enjoyed at the end of September last year, so soft comps should ensure good LFL sales growth over the next two weeks as well - and make House of Fraser look like a hero.

About Nick Bubb

Nick Bubb has been a leading retailing analyst for over 30 years. He is a well-known commentator on UK retailing and is a founder member of the influential KPMG/Ipsos “Retail Think-Tank”.