ScS Group PLC (LON:SCS) is to close all its concessions in House of Fraser stores after a big drop in sales from those outlets, while its core business continued to perform well.
In a trading update for the 12 weeks ended 20 October 2018, the retailer of upholstered furniture and floorings said overall it saw like-for-like order intake growth of 1.2% for the 12 weeks ended 20 October 2018.
READ: ScS Group sitting pretty despite House of Fraser disruption
The group said the core ScS business saw like-for-like order intake growth of 4.5%, and two-year like-for-like order intake has grown 7.4%.
However, during the period, its House of Fraser concessions saw a 52.5% drop in like-for-like orders and the group said it that it will cease trading from its 27 concessions within House of Fraser stores by the end of January 2019.
ScS said the House of Fraser concession business accounted for only 2.7% of its order intake for the 12 weeks ended 20 October 2018.
Back in August, Mike Ashley’s Sports Direct International PLC’s (LON:SPD) paid £90mln in cash for House of Fraser’s 58 UK department stores, the House of Fraser brand and its stock after the department stores group collapsed into administration.
Independent retail analyst Nick Bubb said the big drop in ScS concession sales “no doubt reflects footfall weakness, as well as customer uncertainty about the wisdom of trusting House of Fraser with deposits (the concessions are not branded ScS, but operate as if they’re part of House of Fraser), given the recent PR about the bankruptcy of the business.”
READ: Mike Ashley’s end-game uncertain after Sports Direct’s £90mln acquisition of House of Fraser
David Knight, ScS’s chief executive officer, commented that “given developments in House of Fraser over the last few months, it has become clear that the partnership was no longer beneficial to ScS.”
Looking ahead, the firm said: “Whilst it is still early in the current financial year, the Group, as a whole, continues to trade in line with our expectations.”
In early trading, ScS shares were 0.5% lower at 220p.