British department store group House of Fraser posted a 16 per cent increase in first-half profit and said trading was continuing to pick up, providing further evidence the recession may be nearing an end.
"We certainly planned for it to be worse than it was, so from that perspective we had a firm grasp of our cash and our cost control," chief executive John King told said today.
The department store chain has a big outlet at Dundrum Town Centre in Dublin. "We've seen since Easter improvement in performance and trends across nearly all categories," he said.
The 160-year-old firm, taken private by the Highland Acquisitions consortium in 2006, posted retail earnings before interest, tax, depreciation and amortisation (EBITDA) of £10.7 million for the 26 weeks to July 25th, up from £9.2 million pounds in the previous year.
Sales at stores open over a year fell 2.7 per cent over the half, but were up 0.5 per cent in the second quarter, and up 1.3 per cent in the six weeks to September 5th.
Gross margin increased 18 basis points to 35.7 per cent in the first-half.
House of Fraser, which trades from 62 stores in the UK, cut its net debt by £21 million to £294 million.
"We've repaid or cancelled 150 million pounds of debt since the take-private three years ago. We're 100 million pounds ahead of our original plan," said Mr King.
He is targeting net debt below £180 million by the company's year-end at the end of January 2010, and full-year retail EBITDA of £65 to £70 million.
Rather than new store openings, King expects the firm's growth to be driven by further development of "House Brands", such as Linea, Episode and Kenneth Cole New York, as well as store refurbishments and an enhanced eCommerce offer.
"From a wider market perspective there seems to be a little bit more consumer confidence than there has been but I am still wary of what may well be ahead of us," he said.
House of Fraser's positive update was made as a survey from Nationwide said British consumer morale hit its highest level in more than a year in August.
Reuters