House of Fraser is starting to see “green shoots of recovery” but still faces store closures over the coming year, owner Sports Direct has said.
Chief executive Mike Ashley said “an awful lot of work has been done” to turn what was “an unmitigated disaster into a functioning state”.
Mr Ashley’s Sports Direct group bought the struggling department store chain in August 2018 and the tycoon has previously blamed its former management for problems he described as “terminal”.
But there was a more optimistic view of the business as the group published half-year results.
Chairman David Daly said: “We are starting to see the green shoots of recovery as we continue to integrate the business into the group.”
He also reflected wider hopes for the high street after last week’s general election.
“We are hoping that the political waters will be calmer in the coming months which will allow us to move out of this period of market unpredictability,” Mr Daly said.
Shares rose 12% in early trading.
The update came as shareholders prepared to vote on a proposal to change the name of the group – which includes sportswear chain Sports Direct as well as a number of other brands including Flannels and Game Digital – to Frasers Group.
Mr Ashley said House of Fraser, which Sports Direct bought out of administration, had been “dead, finished, destroyed”.
He added: “It is only through the incredible efforts of those within the Sports Direct group, including the remaining House of Fraser teams, that we are tackling these problems and trying to build a business with a future that is hopefully ‘bright’.
“We are doing as much as we can to realistically save as many jobs and stores as possible however, despite our best efforts, there are still a number of stores which are currently paying zero rent and that are unprofitable and thus not sustainable.
“We are continuing to review the longer-term portfolio and would expect the number of retained stores to continue to reduce in the next 12 months.”
Mr Ashley said the House of Fraser store estate was secure “at least over this Christmas period”.
The chain has shut seven stores since it was acquired by Sports Direct and now has 52.
Sports Direct’s results for the six months to 27 October showed a 6% decline in underlying revenues but a 15% increase in underlying profits, as it drives up margins as part of its “elevation” strategy to push upmarket.
Its “premium lifestyle” division which now includes House of Fraser reported a half-year underlying loss of £5.6m, though this was down on £29m a year ago.
The results also gave an update on a €674m tax demand from Belgian authorities, first revealed in July.
The company said it had “fully engaged” with the authorities but expected that the issue “will not lead to material liabilities”.