Confirmation that swathes of House of Fraser stores will close after the chain was sold brings Chichester’s department store sharply into focus.
C.banner, the Chinese retailer behind Hamleys, said yesterday (May 2) it will buy a 51 per cent stake in the struggling department store chain from its parent Nanjing Cenbest, with £70 million changing hands.
C.banner has committed to making a significant investment into the business.
However, the sale is conditional on House of Fraser shutting stores.
The 59-strong chain, which includes the large store in West Street, Chichester, will put forward a restructuring plan known as a company voluntary arrangement (CVA), which will require the approval of landlords and bondholders.
House of Fraser has been opposite Chichester’s famous cathedral since 1976, formerly called Army & Navy, and in 2016 underwent a major refurbishment.
It is popular with many, selling a wide range of luxury items including perfume and clothing as well as stationary.
House of Fraser leases the Chichester building and last year in April the freehold was sold for £13.4m, with new owners the Charities Property Fund throwing some doubt over its future there by saying at the time: “It is a very attractive building and offers a number of opportunities for alternative uses in the future.”
House of Fraser responded then by saying: “This does not affect the store in anyway, its current use or our tenancy agreement.”
And today, when asked directly if Chichester’s was earmarked for closure, a House of Fraser spokesman said: “At the moment, we cannot give a statement about the CVA as no details have been published.
“The details of the CVA and what format this will take will be released at the beginning of June.”
If Chichester’s is placed on the list of those to be shut, it would be another huge blow to the city’s high street, with clothing giant Next only recently confirming it is looking to get out of its lease in East Street before it ends in 2020, and is unlikely to renew.
Frank Slevin, chairman of House of Fraser, said C.banner’s acquisition was ‘a step to securing House of Fraser’s long-term future’.
He said: “C.banner’s investment is a vote of confidence in our prospects.
“We know that if we are to deliver a sustainable, long-term business then we need to make difficult decisions about our under-performing legacy stores.
“I am all too aware that this creates uncertainty for my colleagues in the business and so we will be transparent with them throughout the process.” House of Fraser’s troubles came to the fore in January after it suffered a drop in sales over Christmas and started talking to landlords about reducing the size of its property portfolio.
KPMG has been drafted in to advise House of Fraser on its restructuring proposal, with the terms of the plan likely to be finalised at the beginning of June.
House of Fraser is a subsidiary of Sanpower, a Chinese conglomerate chaired by Yuan Yafei.
Mr Yuan has voiced his commitment to House of Fraser, which has 6,000 employees and 11,500 concession staff, and has been pumping millions of pounds into the retailer to keep it on an even keel.
Several household names have pursued CVAs so far this year in a bid to save costs, including New Look, Carpetright and burger chain Byron.
House of Fraser acquired Jenners department store in 2005, with the former family-owned institution changing hands in a deal worth tens of millions.