House of Fraser’s parent group reports almost £44m loss ahead of a deal to sell a 51% stake to the Chinese owner of Hamleys for £140m.
Documents filed at the Hong Kong stock exchange by C.banner reveal that House of Fraser Group slumped from a £1.5m pre-tax profit in 2016 to a £43.9m loss last year. The retailer, which has 59 department stores, is struggling under the cost of its property portfolio. In a bid to save the business, Sanpower is selling a majority stake in the business while pursuing store closures.
The figure includes start-up costs for the launch of stores in Nanjing and Xuzhou, and fees paid to the UK business for use of the House of Fraser name overseas. Separate annual accounts for House of Fraser’s UK business are expected to be released soon.
Despite the poor financial showing, C.Banner said House of Fraser would become “more stable” when it completed its restructuring plan, the details of which will be released in June.
C.Banner is hoping a tie-up with House of Fraser will create cost savings in its footwear and toys businesses, as well as in back-office functions such as IT. It said the deal would deliver cost savings and benefits by bringing together C.banner’s footwear business, Hamleys and House of Fraser. It plans to form a board of experts from each business to assess how they can work together.
The deal is subject to bondholder and shareholder agreement and the completion of a restructure in which about 20 stores are expected to close.