The Chinese firm which has a majority ownership in House of Fraser has confirmed plans to offload most of its stake.
A Chinese stock-exchange filing indicates that Nanjing Xinjiekou Department Store (or Nanjing Cenbest) is poised to sell off most of its holdings to tourism development company Wuji Wenhua.
Nanjing Cenbest has an 89 per cent stake in House of Fraser, and is looking to sell off 51 per cent of it. This would mean retaining a 38 per cent stake in the retailer.
Meanwhile, Nanjing Cenbest has confirmed it is in “advanced discussions” with Wuji Wenhua about it investing in the British department store chain.
Nanjing Cenbest – a subsidiary of Sanpower Group, which acquired House of Fraser in 2014 – also hailed the potential collaboration as a strategy that could “further internationalise” the retailer. “We are very proud of our continued stake in the 169-year-old House of Fraser brand.”
House of Fraser had a slump in Christmas sales, its credit rating has been downgraded, and it has drafted in Rothschild to help refinance its debt package.
Nanjing Cenbest is a department store retailer in China, where it runs both the Xinjiekou fascia and Chinese House of Fraser stores.
Bloomberg data shows Sanpower Group has a 27.32 per cent stake in Nanjing Cenbest. When the firm acquired its 89 per cent ownership of House of Fraser in 2014, it had planned to open 50 outlets in China.
So far it has opened only two. The remaining 11 per cent stake in the retailer is owned by Sports Direct founder Mike Ashley.
The department stores have struggled amid the rise of online shopping and a surge in sourcing costs driven by the pound’s 7 per cent fall against the US dollar and 14 per cent decline against the euro since the Brexit vote, reports the Independent.
House of Fraser reported a 2.9 per cent 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 last year the company reported net income of £26.8 million (US$37.2 million).
Sanpower Group, which owns a 27.32 per cent stake in Nanjing Xinjiekou, acquired House of Fraser in 2014 in a deal that valued the chain at £450 million.
