What: House of Fraser’s owner contemplates closing additional stores due to the supposed failure of the traditional department store model.

Why it is important: Under Mike Ashley's ownership since 2018, House of Fraser, acknowledging changing retail dynamics, has significantly reshaped its strategy. Over the past year until April 30, it closed eight branches, halving its store count to 31 in the UK. Closures include the Solihull and Guildford stores by August and September respectively.

Strategic changes yielded robust financial outcomes. Adjusted pre-tax profit doubled to GBP 478.1 million from the previous year's GBP 339.8 million. Foreseeing growth, Mike Ashley predicts a 5% rise, targeting GBP 500 million to GBP 550 million this fiscal year.

Reflecting industry trends, department stores faced decline, prompting House of Fraser's adaptation. Eight closures occurred, and a comprehensive review of the portfolio is underway. Transitioning from 59 to 31 stores since Frasers Group's August 2018 acquisition indicates the magnitude of change.

CEO Michael Murray envisions a nimbler retail footprint, favoring stores around 50,000 square feet, a departure from the classic 150,000 square feet format. Despite changes, House of Fraser remains positive. Aiming for GBP 550 million underlying profit next year, strategic acquisitions drive their growth strategy.

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