Office profits dented by House of Fraser collapse

1872
Office House of Fraser
// Office sales down from £298.7m to £285.5m
// Pre-tax profits plunge to £14.5m, down from £23.4m
// Office was owed £700,000 in concession payments from House of Fraser

Office has recorded a plunge in full-year profits as more markdowns and the collapse of House of Fraser hit the footwear retailer hard.

For the Truworths-owned chain’s financial year ending July last year, it generated sales of £285.5 million – down from £298.7 million in the previous year.

However, the earlier year covered 53 weeks, so the year-on-year comparison was slightly skewed.

Despite this, the gross margin for the latest period was 44.4 per cent, compared to 46 per cent the year prior.

This was attributed to markdowns taking up a bigger chunk of the sales mix.

Meanwhile, pre-tax profits plummeted from £23.4 million to £14.5 million, with the retailer also having been owed £700,000 in concession sales by House of Fraser for the year.

Office said it was “unlikely” that this amount would be paid after talks it had with House of Fraser’s administrators before it was snapped up by Sports Direct.

Office was one of many businesses that was left with a hole in its accounts as House of Fraser racked up debts of almost £500 million before it collapsed last summer.

When Sports Direct bought the department store out of administration, it did so in a pre-pack deal that meant it had no obligation to pay back any of its debt.

However, Office said it was in now talks with Sports Direct and its shoes are still available via House of Fraser’s website.

Office added that the retail trading environment is expected to remain uncertain, “with continued concerns over Brexit and depressed consumer demand”.

Despite this, it insisted that it was a “well-funded and cash generative business and as such intends to continue the expansion of its integrated multichannel business”.

“The board is confident that the Office group is in a strong position to continue to grow and invest for the future,” the retailer said.

Office operates 116 stores and 40 concessions in the UK, Ireland and Germany.

It has been owned by Truworths since 2015.

Click here to sign up to Retail Gazette‘s free daily email newsletter