UK's House of Fraser on brink of collapse as Chinese saviour pulls out
Would-be rescuer Cbanner International shelved plans to buy a 51 per cent stake in the British chain, putting 17,000 jobs at risk
The UK's House of Fraser needs a new lifeline after a Chinese retailer pulled its plan to buy a majority stake, leaving the department-store chain on the brink of collapse and threatening about 17,000 jobs.
Would-be rescuer Cbanner International shelved plans to raise funds for the purchase of a 51 per cent stake in the British chain, citing a plunge in its own stock price over the past month. The company had pledged to pump fresh capital into House of Fraser after taking control from Nanjing Xinjiekou Department Store, a subsidiary of conglomerate Sanpower Group.
“House of Fraser is in discussions with alternative investors and is exploring options to obtain the required investment on the same timetable,” the company said in a regulatory filing late on Wednesday. “Discussions are ongoing and a further announcement will be made as and when appropriate.”
The news marks another dark turn in the British retail crisis, after the collapse of brick-and-mortar institutions such as Maplin Electronics, the UK arm of Toys “R” Us and department-store operator BHS.
Store chains are being crippled by pressure from online retailers such as Amazon, exacerbated by a rise in costs stemming from the pound’s Brexit-induced weakness. Clothier Next’s sales growth fell short of estimates in the latest quarter, while retailers Marks & Spencer and Debenhams are shrinking store space.
House of Fraser was already seeking to shut more than half its department stores in the UK and Ireland through a British insolvency procedure.
Cbanner controls brands such as Steve Madden and Badgley Mischka. Sales in its main shoe retailing business have slumped in the face of online competition, and the plan to buy control of House of Fraser had wiped out three quarters of its stock-market value.
Sanpower’s acquisition of House of Fraser in 2015 valued the British chain at around $623 million. At the time, Sanpower chairman Yuan Yafei said the company would build 50 outlets in China under the name “Oriental Fraser”. Three years on, only two have opened and Sanpower has turned its attention to building a healthcare business.
Updated: August 2, 2018 12:24 PM