ScS to close HoF concessions; core business doing well

In an update for the 12 weeks to 20 October, the company said it achieved like-for-like order intake growth of 1.2%, with the core business continuing to perform well. Like-for-like order intake grew 4.5% and two-year LFL order intake was up 7.4%.

However, its House of Fraser concessions saw LFL orders decline by 52.5%. ScS noted that the HoF concession business accounted for only 2.7% of the group's order intake for the period.

It said it was working with affected employees and looking to re-deploy them within the wider ScS Group where possible.

Chief executive David Knight said: "I would like to take this opportunity to thank all of our colleagues who have worked in our House of Fraser concessions over the past few years for their dedication and hard work. However, given developments in House of Fraser over the last few months, it has become clear that the partnership was no longer beneficial to ScS.

"We are pleased to announce that we have continued to trade well in the core ScS business in the first 12 weeks of our financial year. We will continue to focus on our successful value offering proposition, coupling this with the excellent service that ScS provides and that our customers know and love."

Independent retail analyst Nick Bubb said the drop in HoF 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".

"That news will give the embattled Mike Ashley further food for thought, as he digests the news from Debenhams this morning," he said.

Shore Capital analyst Clive Black said the 4.5% jump in order intake for the core business is an "exceptionally strong absolute and relative performance in far from easy UK market conditions".

As far as the closure of the HoF concessions is concerned, Black said he welcomed the clarity this provides.

"ScS is emerging as a really class act that stands apart from much of the trade in its out-performance. The group also has a strong financial constitution, which leads us to believe that the its equity is quite fundamentally undervalued," he said.

At 1253 BST, the shares were down 1.6% to 217.52p.