House of Fraser has seen ratings agency Moody’s downgrade its status to “very high credit risk” due to consistently weak performing sales.
This follows three consecutive quarters of poor sales at the department store retailer, with its £25 million upgrades to its ecommerce platform reportedly failing to deliver results.
“Absent an unexpected general uptick in consumer demand, a recovery in House of Fraser’s profitability is dependent on either an improvement in the company’s product offer or in cost savings initiatives, which involve execution risks,” Moody’s vice president David Beadle said.
Elsewhere, New Look has also seen its rating downgraded, pointing to falling profits and predictions of next quarter’s results will “fall well short” of last year.
In the 26 weeks to September, the fast fashion retailer saw a 72.2 per cent drop in EBITA year-on-year to 24.2 million.
“Our decision to downgrade New Look’s ratings reflects our expectations that, after a particularly weak second quarter, results in the second half of the company’s fiscal year will also fall well short of last year,” Beadle said.
“Following changes to the senior management team, New Look is seeking to refocus on its historic value-based broad appeal.
“However, this strategy will take time, and the path towards a meaningful recovery in profitability is uncertain.”
Click here to sign up to Retail Gazette‘s free daily email newsletter
