Stake sold to Chinese group
House of Fraser agrees to close department stores
The building which houses the Frasers store in Princes St Edinburgh is up for sale
House of Fraser has confirmed that it will close a number of stores as part of a rescue package that will include a cut in rents for other outlets.
The company, which also owns Jenners, has drawn up a company voluntary arrangement (CVA) after owner Nanjing Xinjiekou Department Store agreed a deal to sell a controlling stake in the company to the owner of Hamleys.
Sanpower-controlled Nanjing has proposed a CVA in a move which will see it shut the weaker performing of its 59 stores across the UK and renegotiate rents on others. There was confirmation of the number or location of those stores earmarked for closure. The group’s stores employ 6,000 staff and with about 11,500 in concessions.
Nanjing hired accountancy giant KPMG to help overhaul the business and speed up its turnaround. Once the CVA is complete, a 51% stake in the chain will be sold to the Chinese footwear giant C.banner, which also owns toy store Hamleys.
Frank Slevin, chairman of House of Fraser, said: “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.”
He added: “We need to make difficult decisions about our underperforming legacy stores.
“There is a need to create a leaner business that better serves the rapidly changing behaviours of a customer base.
“House of Fraser’s future will depend on creating the right portfolio of stores that are the right size and in the right location.”
A CVA is designed to help a struggling company to pay back a proportion of its debts over time.
It involves a repayment scheme overseen by an insolvency practitioner and has to be approved by 75% or more in value of the firm’s creditors.