2nd Jun 2014 08:27
LONDON (Alliance News) - British supermarket chain Tesco PLC confirmed Monday it has signed a deal with House of Fraser which will see Tesco sell the UK department store chain's homeware products through the Tesco website.
Tesco said it has partnered with House of Fraser to sell over 2,000 homeware products though Tesco Direct, including popular House of Fraser brands such as Linea and Pied A Terre.
The deal will extend the supermarket's reach into more "premium" products, while House of Fraser will benefit from Tesco's large customer base.
"For the first time, Tesco customers will be able to earn Clubcard points on House of Fraser homeware products as the famous department store joins Tesco Direct," Tesco said in a statement.
News of the deal comes just days before Tesco is due to report its sales figures for the first quarter, with analysts expecting continued weak sales figures from the UK and Europe.
"Current trade in the UK is very weak, and we estimate like-for-like sales to be down around 3.5% in the first quarter," said Shore Capital analysts.
Tesco continues to struggle to keep up with better-performing rivals and maintain market share, having reported another drop in annual group trading profit for its most recent financial year, as it saw falling sales in the UK and Europe. Discount supermarkets Aldi and Lidl are also upping the pressure on the UK's big supermarkets of late.
In the UK, Tesco's biggest business, the grocer has been losing profits as sales continue to fall, as customers have begun to shop elsewhere for better bargains and value from its competitors. In Europe, trading profits have also dropped considerably as sales in the region decline dramatically.
Tesco has recorded some better news from Asia, having recently completed the creation of a new venture, where it is a minority shareholder, with China Resources Enterprise.
However last week, Tesco said it failed to strike a deal with various parties regarding "potential options" for its struggling Turkish business, which had included a possible sale of the business or operating partnership.
Tesco said Monday that retailer House of Fraser joins over 50 Tesco Partners on Tesco Direct, which offers customers access to a selection of brands, Clubcard points on every purchase and a convenient delivery service, including click & collect. Other Tesco Partners available on Tesco direct include Mothercare PLC's children's toys business Early Learning Centre, as well as electronic goods retailer Maplin and baby goods company Mamas & Papas.
"We bring over 160 years of department store retail experience, so there is huge potential to create a great working relationship between our businesses," said Andy Harding, executive director of multichannel for House of Fraser.
Back in April, House of Fraser confirmed that a subsidiary of Chinese conglomerate Sanpower Group Co Ltd had bought up a 89% stake in the company, giving the 165-year-old retailer an enterprise valuation of GBP480 million.
Tesco shares were down 0.8% at 301.20 pence Monday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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