Frank Slevin, Chairman, and Alex Williamson, CEO, House of Fraser
House of Fraser has been added to the growing list of struggling UK retailers as it sells a majority stake to the owner of Hamleys.
House of Fraser currently has 59 retailers but it is still unknown which of the stores will close in the purchase deal.
Background and ownership
Hamleys owner, C.banner International Holdings Limited, has said it will provide capital to further the transformation project at hand.
The store group, currently owned by Nanjing Cenbest, will install a company voluntary arrangement (CVA) next month with the reconstruction process beginning early next year.
A CVA is used so a company can pay back a portion of its debt over time. Once the House of Fraser CVA has been approved, a majority stake (51%) will be sold to C.banner.
House of Fraser has been in operation for over 168 years. The group has annual sales of £1.3 billion and employs 5,000 people.
Chairman of House of Fraser, Mark Slevin, commented: “C.banner’s acquisition of 51% of House of Fraser, together with the new capital and restructuring, represents a step to securing House of Fraser’s long-term future.
“With the support of Nanjing Cenbest and Sanpower, Alex Williamson and his team have made substantial progress on our transformation journey. However, we need to go further and faster if we are to confront the seismic shifts in the retail industry. There is a need to create a leaner business that better serves the rapidly-changing behaviours of a customer base which increasingly shops channel agnostically. House of Fraser’s future will depend on creating the right portfolio of stores that are the right size and in the right location.
“C.banner’s investment is a vote of confidence in our prospects. We also know that if we are to deliver a sustainable, long-term business then we need to make difficult decisions about our underperforming legacy stores. I am all too aware that this creates uncertainty for my colleagues in the business and so we will be transparent with them throughout the process.
“These measures are essential to ensure that House of Fraser remains an iconic department store group for many years to come.”
C.banner is now expected to raise £70 million by issuing new shares.
Under Nanjing Cenbest’s ownership, there were plans to expand House of Fraser in China but only one store was established in Nanjing.