House of Fraser’s parent group swung to a near £44m loss last year 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 on Thursday by C.banner reveal that House of Fraser Group, which includes the department store chain’s two Chinese outlets, slumped from a £1.5m pretax profit in 2016 to a £43.9m loss last year.
The figure includes startup 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.
But the information filed by C.banner, which owns the Sundance and MIO footwear brands in China as well as Hamleys, also revealed that House of Fraser’s sales slid 6.3% to £787.8m amid a tough market in the UK.
Maplin, Toys R Us and Jacques Vert have all collapsed in recent months, but several retailers and restaurant groups are facing financial problems and are trying to close stores or negotiate rent cuts.
Gourmet Burger Kitchen: The upmarket burger chain wants to close 17 of its 85 restaurants via an insolvency process known as a company voluntary arrangement (CVA)
House of Fraser: The department store chain is expected to close about 12 stores after being bought out of administration by Mike Ashley. It had agreed a CVA under which 31 stores were to close, but this lapsed on administration.
Homebase: The DIY chain is closing at least 42 stores after completing a CVA organised by new owner Hilco. The restructuring expert bought the DIY chain for £1 from Australia's Wesfarmers who botched an attempt to bring its Bunnings chain to the UK.
Poundworld: The discount retailer has closed all its 355 stores, with the loss of 5,100 jobs after falling into administration in June.
Cau: The owner of the Gaucho and Cau steakhouses fell into administration in July leading to the closure of all 22 Cau restaurants, with loss of 750 jobs. The groups lenders have since bought the 16 Gaucho outlets.
Mothercare: The chain is closing 60 of its 137 outlets after agreeing a CVA in May. Additional closures in July mean 900 jobs will be lost.
Carluccio's: The Italian chain secured a CVA to close 30 of its 99 restaurants in late May.
New Look: The chain is closing 85 stores in a restructuring plan announced earlier this year. Its chairman, Alistair McGeorge, said the future of a further 39 stores was in doubt as talks with landlords continued.
Carpetright: The retailer obtained a CVA in April to close 92 of its 409 UK stores in September with the loss of about 300 jobs.
Prezzo: In March the Italian-themed restaurant group secured a CVA to close 94 of its 300 restaurants, with the loss of 500 jobs. Rent cuts were agreed on a further 57 locations.
Jamie’s Italian: The chain closed six locations in 2017 and this year agreed a CVA to close about a third of its 35 loss-making outlets.
Byron: The upmarket burger chain is closing up to 20 of its 67 restaurants after a CVA agreed in January.
Debenhams: The under-pressure department store chain has said it could close up to 50 of its 165 stores stores and wants to get rid of space at 30 more by bringing in gyms and other services.
M&S: The high street stalwart wants to close 100 outlets – a third of its main stores by 2022 as part of a 'radical transformation' plan.
C.banner told investors it agreed to buy a 51% stake in House of Fraser to “enhance the company’s presence in the retail market in [China] as well as to facilitate the company to lay a good foundation for a new brand and retail roadmap overseas”.
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 acquisition is structured via the buyout of a 34% stake from the current owner, Nanjing Cenbest, part of the Chinese conglomerate Sanpower, for £71m and then the acquisition of £69m in new shares to be issued. The announcement reveals the full price paid by C.banner for the first time.
The deal relates to House of Fraser’s parent group, which owns an 89% stake in the UK business, with Sports Direct holding an 11% stake. Sports Direct has expressed concern about events, taking legal action to seek further information on the company’s business plan including a major restructuring.
The deal is subject to bondholder and shareholder agreement and the completion of a restructure in which about 20 stores are expected to close.
