House of Fraser trading update reassures over covenants

In a statement House of Fraser said: "The department store continues to be in a strong financial position. The group is trading ahead of plan and is seeing sales on an improving trend with positive growth in the last 12 weeks. It is business as usual for House of Fraser."

The retailer revealed that at the close of business on June 15 it had cash at the bank in excess of £85m and further available working capital facilities of £36m.

"This is sufficient to meet all its obligations for the foreseeable future," it said. 

House of Fraser also denied speculation that it or any of its 62 stores are up for sale, after newspaper reports today suggested that Debenhams may make a bid for the business or some of its stores.

House of Fraser said: "Following recent incorrect market speculation reported in the media, House of Fraser would like to clarify that it currently has no intention of selling any of its 62 stores."

House of Fraser repaid £59.8m of debt in its last financial year in the year to January 24 and to date has repaid more than £140m of facilities arranged at the time of the acquisition.

"The business remains fully compliant with all of the conditions contained within its banking agreements," it said.

Singer analyst Matthew McEachran said: "Like Debenhams, House of Fraser is being dragged down by some of its concessions, for example Mosaic brands, but it is still trading positively in like-for-like terms."

He added that any acquisition activity by Debenhams, which amassed a £250m war chest following its £323m share placing earlier this month, is likely to relate to "smaller deals" such as its acquisition of Principles stock earlier this year.

He said that although a Debenhams and House of Fraser deal could lead to synergies and cost savings "timing feels inappropriate and they both have plenty on their plates".

House of Fraser will update the market in September on its half-year performance to the end of July.