Distribution centre moves affect costs at HoF

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House of Fraser saw its distribution costs rise last year, in part as a result of the opening of a new distribution centre at Wellingborough and the reconfiguration of its existing Milton Keynes site to handle on-line business.

In its annual report, parent Highland Group Holdings said the move to Wellingborough had involved dual running and transition costs. The growth in online sales also had an impact on costs.

Turnover for the year to 28th January 2012 was £685.6m – up from £669.2m the year before. But distribution costs rose from £291.1m to £312m. Adjusted EBITDA slipped to £58.6m from £69.7m.

The new distribution centre at Wellingborough has a ground floor of 150,000 sq ft with capacity for significant mezzanine space. It is being used to serve the stores. Milton Keynes has been reconfigured to handle online.

Highland Group said: “During the year, the logistics partner operating at Milton Keynes was changed and a new five year agreement was entered into, limiting higher potential future cost increases expected as on-line activity further develops.

“The inbound logistics operations were also renegotiated during the year, changing to a new partner focused on delivering further operations improvements and cost savings.

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