Hamleys owner in discussion with House of Fraser
THE owner of Hamleys has entered into discussions to acquire a stake in troubled department store House of Fraser.
C Banner International Holdings, which bought Hamleys in 2015, has signed a memorandum of understanding (MoU) with Nanjing Xinjiekou department store, a company affiliated with House of Fraser’s owner Sanpower.
The Chinese firms signed the pact in Hong Kong yesterday with an official announcement due later in the day.
The agreement signifies that C Banner and Nanjing have entered into talks about a sale of a stake in House of Fraser, although discussions are still at an early stage.
Shanghai-listed Nanjing owns an 89% stake in House of Fraser, and is a subsidiary of Sanpower, a Chinese conglomerate chaired by billionaire Yuan Yafei.
Nanjing is also in discussions with tourism company Wuji Wenhua over selling a 51% stake in the British department store.
The talks with Wuji Wenhua were first announced in March, but Sanpower did not rule out selling a part of its House of Fraser holdings to a third party.
The potential sale of a stake in House of Fraser has raised questions about Mr Yafei’s commitment to the troubled retailer.
However, Mr Yafei has said he is committed to House of Fraser as it puts together a turnaround strategy.
It is unclear at this stage how a combination of two of the best known names in British retail would play out, but the move comes at a delicate time for House of Fraser.
The British department store has now enlisted advisers at KPMG to look at a possible restructuring that could involve store closures.
KPMG is exploring a number of options for House of Fraser, including a Company Voluntary Agreement (CVA), a type of insolvency procedure that would allow the retailer to close stores and cut rents on other outlets.
The House of Fraser store in the centre of Cardiff – which is also known as Howells – is one of the biggest department stores in Wales, extending to 270,000 sq ft of retail space and occupying a prime 1.7 acre site.
In the summer of 2016 the property interest in the building was acquired in a £37m property deal by Rosette Merchant Bank on behalf of Middle Eastern investors.
House of Fraser’s troubles came to the fore in January after it suffered a drop in sales over Christmas.
The business has already started talking to landlords to reduce the size of its stores in a bid to cut its rent bill.
House of Fraser has 6,000 employees and 11,500 concession staff.
Several household names have pursued CVAs so far this year in a bid to save costs, including New Look and Byron.
Toy R Us was one of the most high-profile retail casualties in the first quarter, with electronics retailer Maplin also going into administration on the same day.
Retailers including New Look and Carpetright have opted for CVAs this year, putting hundreds of jobs in doubt.
Restaurant chains have also been hit by a squeeze on consumer spending. Byron, Jamie’s Italian and Prezzo have all announced plans to shut stores as part of restructuring plans.
Mothercare, Debenhams and Homebase are also under intense pressure.
High street retailers have been battling against a combination of rising costs, fall in consumer confidence and online competition.