01 August, 2018
The saga about House of Fraser has now rolled on from the Spring without any resolution. Today BBC News reported two developments; a) Sports Direct founder Mike Ashley have been asked for a loan by the House of Fraser management and that b) the House of Fraser management has approached turnaround specialists Alteri (among others).
The background is that the Chinese owner, Sanpower, has been unable or unwilling to invest in the ailing department store group. In addition, its original investment included a plan to roll out House of Fraser stores across the Chinese mainland, something that did not materialise.
With the UK retail industry suffering the effects of Amazon, Brexit and sluggish wage growth, House of Fraser performed poorly. In April 2018 Sanpower entered into and agreement to buy the 89% stake owned by Sanpower. However, this was going to be subject to a CVA process with the group closing 30 of its stores.
The way the CVA was announced can only be described as a PR disaster. Landlords learned about the plans via news media and finally decided to go to court, buoyed by Mike Ashley's 11% ownership in the department store group.
However, the result has been that C Banner International Holdings (owner of Hamleys) withdrew from the process causing the distress calls to Mike Ashley's Sports Direct and contacts with turnaround specialists.
It is thought that HoF has a £25 million rent bill that needs settling in the end of September and that the company may elect to go into administration in August or September.
How will this affect brands such as SuperDry which are sold in House of Fraser stores?