Nanjing Xinjiekou Department Store to sell 51% stake as UK’s department-store chains struggling against e-commerce.
Nanjing Xinjiekou Department Store will sell its 51% holding to a tourism development company named Wuji Wenhua, according to a Chinese stock exchange filing Tuesday. The planned sale follows the collapse of Toys R Us UK and electronics retailer Maplin in February.
The UK’s department stores have struggled amid the rise of online shopping and a surge in sourcing costs driven by the pound’s 7% fall against the dollar and 14% decline against the euro since the Brexit vote. Sports Direct International CEO Mike Ashley this month increased his holding in Debenhams, spurring speculation he may acquire the House of Fraser rival. Mike also owns a minority stake in House of Fraser.
House of Fraser reported a 2.9% drop in sales over the holiday shopping season and has entered negotiations with landlords to reduce rents on some of its 59 UK stores. In the year ended January 2017 the company reported net income of £26.8m ($37.1m).
The sale of the stake “will have no impact on the day-to-day operations or strategic development of the House of Fraser business in the UK and Ireland,” the store chain said in a statement. “It is business as usual.”