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Tag: House of Fraser

  • Hamleys no longer under ownership of China’s C.banner

    Hamleys no longer under ownership of China’s C.banner

    Toy retailer Hamleys looks likely to be sold by Chinese owner C.banner International. The company has launched a strategic review of options for Hamleys’ future after receiving several expressions of interest from would-be buyers. C.banner International has owned Hamley’s for just three years, but the Chinese company has suffered a massive decline in its share price leading to an aborted bid for UK department store House of Fraser.

    At the time the Hong Kong-listed company planned a share issue to raise funds to acquire House of Fraser, it expected to receive between HK$2.40 and $3 per share. In August, when it dropped the plan, its shares were trading at 71 cents and today they are trading at just 56 cents each.

    The prospective bidders have not been named and talks are at a preliminary stage. C.banner has appointed Vermillion Partners to oversee discussions.

    In the year to December 31, Hamley’s recorded a loss of £12 million, a heavy reversal from a profit the previous year of £2.6 million. Sales fell 2.5 per cent to £66.3 million.

    But the company said it was on track to return to profitability and during the first eight months of this year it achieved 2.7 per cent like-for-like sales growth.

  • Superdry expect loss from prolonged summer

    Superdry expect loss from prolonged summer

    Superdry has issued a profit warning, saying an unseasonably warm European and US east coast summer together with foreign exchange costs will reduce income by about £10 million. “Superdry is a strong brand with significant growth opportunities, backed by robust operational capabilities, but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather,” said CEO Euan Sutherland in a statement.

    “We are well prepared for peak trading, but the second half of financial year 2019 presents both risks and opportunities.”

    The company’s share price fell a heavy 20 per cent in early trading after the announcement was made.

    Foreign exchange costs are expected to be about £8 million higher this year and the collapse of department store chain House of Fraser has left the fashion retailer an estimated £236,000 out of pocket.

    Sofie Willmott, senior retail analyst at GlobalData, said rival chains Quiz, Coast and Ted Baker have all been hit by the downfall of House of Fraser. “Superdry, the usually untouchable brand that consistently delivers double-digit sales growth, is the next to be affected.”

    Willmott said Superdry has had an unhealthy reliance on autumn/ winter stock and was unable to trade in season.

    “Given that the only certainty with weather is that it can be unpredictable, Superdry should have been better prepared to react to the prolonged warm summer, cutting back on volumes of jackets and coats to avoid overstocks and the need for markdowns.”

    Superdry knows this is an issue and is five months into an 18-month product-diversification program to broaden its range.

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  • Stephen Marks mulls French Connection sale

    Stephen Marks mulls French Connection sale

    French Connection founder and CEO Stephen Marks plans to sell his remaining cornerstone stake in the fashion label.

    Sky News UK has reported Marks has engaged Numis Securities to approach prospective buyers for the 42 per cent stake in French Connection which he still holds. He founded the brand back in 1969.

    UK media is reporting that should a buyer be found for the stake, it would almost certainly trigger a takeover bid for the entire company. A formal stock exchange announcement is pending.

    French Connection is emerging from a challenging period in its history after its hugely successful FCUK era brand positioning fell from favour in the late 2000s. In recent months, it has built strong sales online via Asos and it raised £23.3 million from the sale of 75 per cent of its Toast label in April to Danish retailer Bestseller United, parent of Selected, Vera Moda and Jack & Jones, among others.

    But the parent brand, now down to a store network of only about 30, recorded a like-for-like sales decline of 7 per cent in the half year to July 31 and a loss of £5.5 million. Marks, however, anticipates the business will be profitable by January with licensing income on the rise, reaching £2.6 million for the period, and wholesale revenues up 6.2 per cent.

    Any deal for Marks’ stake will be heavily influenced by the second largest shareholder in French Connection, Mike Ashley, who holds 27 per cent of the stock. Ashley recently bought out troubled House of Fraser and is CEO of Sports Direct.

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  • Blow for House of Fraser as Chinese firm drops plan to invest

    Blow for House of Fraser as Chinese firm drops plan to invest

    C.banner International has dropped its House of Fraser rescue plan, dealing what some observers in the UK are describing as a potentially fatal blow.

    Hong Kong-listed C.banner, which is the parent of toy retailer Hamleys, had undertaken to invest £150 million into House of Fraser assuming control of the business.

    In June, the deal appeared to be confirmed after creditors of House of Fraser agreed to a Company Voluntary Agreement in which 31 stores would close in the UK and Ireland and 6000 jobs cut. After the downsizing, House of Fraser would have just 28 stores in the UK and Ireland. Creditor approval of the CVA was a pre-condition of C.banner’s investment.

    However in a statement issued to the Hong Kong stock exchange, C.banner has backed out.

    “In view of the fact that the recent market prices of the shares as quoted on the stock exchange have significantly dropped to a level which is far below the placing price range of HK$2.40 to $3.00 per placing share, the company and the placing agent are of the opinion that the placing has been rendered impracticable and inadvisable, and therefore no longer intend to proceed with the placing.”

    C.banner’s share price has fallen to $0.71 since June 1, when it announced the plan.

    Furthermore, C.banner has issued a profit warning, predicting a loss of RMB20 million in the six months to June, compared with a RMB39 million profit for the same period last year.

    Talks with new suitors

    Meanwhile, House of Fraser is now in negotiations with other parties, including Mike Ashley, the owner of Sports Direct, over a rescue bail-out – it needs £50 million rapidly to avoid collapse.

    As reported, the department store group is struggling to pay a quarterly rent bull of nearly £25 million due in late September and to fund the purchase of millions of pounds of stock for the peak Christmas trading period.

    And, subsequent to creditor approval of the CVA, some of the company’s landlords have launched a legal challenge against the planned store closures and rent reductions. While all creditors had a vote on adopting the CVA, it only required a majority of 75 per cent to be carried. The landlords were on the losing side of that vote.

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  • House of Fraser set to close 31 stores – but Dundrum to survive

    House of Fraser set to close 31 stores – but Dundrum to survive

    British-based retailer House of Fraser is set to close 31 of its 59 stores, but its Dundrum store in Dublin and its Victoria Square outlet in Belfast will survive the cull.

    The company is implementing a restructuring plan that will affect 6,000 jobs – 2,000 House of Fraser employees and 4,000 concessions – in a bid to save the company.

    The closures are part of a proposed Company Voluntary Arrangement. CVAs allow insolvent firms to continue trading while paying creditors over a fixed period.

    The CVA, a legal process in the UK that requires landlords to agree to reduced rents or terminations of lease, is a condition for the sale of a controlling stake in the department store group to Hong Kong listed company C.banner, that also owns toy shop Hamleys and plans to inject £70 million of fresh capital into House of Fraser.

    The stores scheduled for closure, which include the group’s Oxford Street store in London and many outlets in provincial cities in Britain’s north and midlands, will remain open until early in 2019.

    Creditor meeting

    The creditor meeting to approve the CVA will be held on June 22nd. Landlords have already signalled their disquiet with the proposal, because it does not impose losses on other creditors or shareholders.

    In a statement, House of Fraser said without the restructuring plan, the company did not have a viable future.

    The restructuring process will also see the company relocate its head office in Baker Street and its Granite House office in Glasgow to new locations to help cut costs.

    The planned closures follow last month’s announcement that another Chinese group, retailer C.banner, had agreed to become the majority owner with a 51 per cent stake, with Nanjing Cenbest remaining a minority shareholder. Mike Ashley’s Sports Direct chain owns an 11 per cent stake in the retailer.

    House of Fraser said it had held constructive initial discussions with landlords and other key stakeholders.

    “The retail industry is undergoing fundamental change and House of Fraser urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive,” said Frank Slevin, chairman of House of Fraser.

    “Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business. “So whilst closing stores is a very difficult decision, especially given the length of relationship House of Fraser has with all its locations, there should be no doubt that it is absolutely necessary if we are to continue to trade and be competitive.”

    The use of CVAs have been criticised by landlords in the UK. Speaking on BBC Radio 4’s Today programme on Thursday morning, Ian Fletcher of the British Property Federation said: “The only way to challenge [a CVA application] at the moment is to go to court – that’s not a particularly appetising proposition for anybody.

    “These are big decisions, they involve billions of pounds and they involve people’s jobs and at the moment the only person that is the judge and jury on those is the insolvency practitioner so there is a group already that exists called the pre-pack panel, they could have a role in terms of giving a second opinion.”

    Those affected by the store closures have already been informed. Among those set to close are the company’s Oxford Street store in London and stores in Birmingham and Bournemouth.

    The House of Fraser store in Dundrum is a separate legal entity.

  • House of Fraser’s Chinese owners to sell stake in department store

    House of Fraser’s Chinese owners to sell stake in department store

    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.

    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.

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  • John Lewis fashion sales soar

    John Lewis fashion sales soar

    John Lewis fashion sales rose a tremendous 7.2 per cent over Christmas – eclipsing the UK department store’s rivals, even robust performances by Debenhams, M&S and House of Fraser.

    Own brand collections continued to strengthen throughout 2016, with the inclusion of Modern Rarity filling a gap in its private label brand portfolio by appealing to a stylish, design-led shopper and taking Cos on as a direct rival. John Lewis should consider taking this brand into menswear, given the outperformance of menswear in 2017 versus other clothing sectors, and the current gaps in the market for brands targeting the 30-45 year old male shopper.

    Its Electricals Home & Technology division was up against the strongest comparative, rising 4.8 per cent against a 9.6 per cent rise last Christmas. The department faced huge discounting pressure from rivals Amazon, Argos and Dixons Carphone, particularly over Black Friday when promotions were offered over a week ahead of the main event. However, John Lewis’ strategy of selling the latest models across technology categories will have limited its exposure to the breadth of discounts available elsewhere.

    As one of the leading players in selling affordable smart home technology, John Lewis can expect to see a greater uptake in demand in 2017 following its significant investment in the department during 2016 and increasing consumer awareness.

    Home reported the slowest sales growth at 2.7 per cent against a 5.1 per cent rise last year, though this is outperforming both the home and furniture markets and is resilient given the fall in housing transactions.

    Paula Nickolds takes over the reins this month from Andy Street, marking the start of a new era for the department store. Nickolds’ understanding of the business will ensure Street’s legacy and strategy will be carried forward, but her new appointment begins at the start of what will be a challenging and unpredictable three year (at least) period, so new initiatives will be important to stimulate demand.

    -Honor Strachan

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  • House of Fraser sales plummet under Chinese owner

    House of Fraser sales plummet under Chinese owner

    The global ambitions of House of Fraser’s new Chinese owners have fallen flat, management is disgruntled and profits have dived nearly 50 per cent in the first half year.

    That’s the analysis of Verdict Retail senior analyst Emily Stella, who says the department store’s fate is “being closely watched”.

    Unseasonable weather and consumer uncertainty were factors in the decline, she adds.

    But the news is not all bad.

    “House of Fraser has reported a positive set of results for the Christmas period: the beauty category performed particularly well, with an increase in gifting and the onset of party season. [In the UK] House of Fraser’s Black Friday results were also commendable, with sales rising 2.7 per cent on last year – driven primarily by strong online demand, which represented 41 per cent of total sales across the week-long event.”

    After repeated postponements, House of Fraser opened its first standalone store in China in Sanpower Plaza in Nanjing in December.  The company is owned by Chinese conglomerate Sanpower Group, whose affiliate C.banner International owns British toy giant Hamleys, which has opened a store in the same centre.

    House of Fraser chairman Frank Slevin said at the opening that the chain will look to benefit from the strong demand by Chinese consumers for UK brands.

    Meanwhile, Stella says the retailer has rightly invested in refurbishing its existing UK stores.

    “These stores have been the retailer’s top performers over the Christmas weeks and supported like-for-like sales growth. Continued investment in its online platform and store estate, as well as offering consumers a broad range of brands will be critical as the retailer faces tougher market conditions in 2017.”

    The true performance of House of Fraser over Christmas will be able to be assessed when rivals M&S, Debenhams and John Lewis reveal their results tonight, providing a benchmark for all.

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  • House of Fraser China opens first store

    House of Fraser China opens first store

    British department store chain House of Fraser has opened its first standalone store in China, in Sanpower Plaza in Nanjing, the capital of Jiangsu province.

    Owned by Chinese conglomerate Sanpower Group, the House of Fraser China store spans six floors with more than 425,000 sqft (39,483 sqm) of retail space. It is introducing such brands as Cambridge Satchel Company, Peter Werth and Radley into the Chinese market.

    House of Fraser chairman Frank Slevin says the chain will look to benefit from the strong demand by Chinese consumers for UK brands.

    In September, the company described trading in the UK as “very challenging”. It said the retail sector there was facing significant change in “structural dynamics as consumers’ shopping habits and delivery expectations continue to evolve”.

    “The opening of the store in Nanjing is a strong way to finish the year,” says Slevin.

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  • House of Fraser China debut nears

    House of Fraser China debut nears

    UK department store group House of Fraser is preparing for its debut in China after pushing back its original April launch date because of the Chinese New Year.

    House of Fraser China says it has made “good progress” with its store planning with the launch now set for late this year.

    The first store will open in Nanjing, inspired by the historic Frasers store in Glasgow, and featuring international and local brands. The opening will follow flat sales for the group during the first half of its latest fiscal year. However, the Chinese-owned department store group believes there is “significant opportunity” to set up as a global brand, says executive chairman Frank Slevin.

    When Sanpower Group acquired House of Fraser two years ago, founder Yuan Yafei spoke of a global vision for the department store, including outlets throughout the Middle East and Russia, and as many as 50 stores in China.

    House of Fraser last year confirmed it would open three stores in China.

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  • Laura Ashley to expand to China

    Laura Ashley to expand to China

    After several attempts at cracking the market, Laura Ashley will finally launch in China.

    The British retailer, owned by Malaysia-based MUI Group, will open a website via the Alibaba-owned Tmall website and will have a concession within the first House of Fraser store in China set to open this autumn.

    Laura Ashley finance director Seán Anglim said its long-term aim was to find a Chinese franchise partner.

    “China is not easy as evidenced by how many have got in and how many have come out,” Anglim said.

    “It is all about finding the right partner and doing it at the right time.”

    Laura Ashley currently has franchise partners in 30 countries outside the UK and an online store in six.

    The company also has ambitions to establish new online stores in Hungary and the Czech Republic in coming months.

    The Chinese move comes after the retailer this week reported a £25.8 million profit before tax and exceptional items for the 74 week period to June 30 – a 12.6 per cent increase on the 2015 figure.

     

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  • Binding offers sought for McDonald’s China

    Binding offers sought for McDonald’s China

    Selected bidders for McDonald’s China and Hong Kong, including China Cinda Asset Management and dairy producer Beijing Sanyuan Foods, have been asked to make binding offers.

    Also invited earlier to submit a second-round bid are Sanpower Group, which owns UK department store House of Fraser, and GreenTree Hospitality.

    McDonald’s is selling 20-year mass franchise rights in China and Hong Kong, which could fetch $2 billion.

    Illinois-based McDonald’s has hired Morgan Stanley to run the sale of about 2800 restaurants in China, Hong Kong and South Korea along with 20-year franchise rights. The South Korean McDonald’s business is also being sold, with local cinema and cafe operator CJ Group reportedly the front-runner at this stage.

    McDonald’s announced in March that it was reorganising in Asia by bringing in partners to own restaurants within the franchise business. Competitor Yum Brands, which has the KFC and Pizza Hut chains, is also restructuring in China.

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  • House of Fraser opens first store in China

    House of Fraser opens first store in China

    UK and Ireland’s department store group House of Fraser opened its first store in China this month. The store, located Xinjiekou Sanpower Plaza (International Financial Centre) in Nanjing, covers a total building area of approximately 28,500 square meters with six floors and around 50 video screens.

    Several brands have partnered with House of Fraser to introduce its products for the first time to the Chinese market.  There are also new concepts such as Style by HoF, and a Nike Beacon store, the largest Nike beacon store in China as well as Monceau, a lifestyle and cafe.

    The store aims to provide a premium retail experience, including a VIP lounge, a VIP loyalty, and personal shopping. The world’s biggest toy chain Hamleys and the American novelty retail corporation Brookstone are adjacent to the store.

    Nanjing is the capital of the Jiangsu Province in Eastern China and has a total population of 8.2 million. Its commercial center, Xinjiekou, has a total of over 1,600 businesses and the most prosperous area in downtown Nanjing.

    House of Fraser completed its sale to Nanjing Xinjiekou Department Store, a Chinese department store chain owned by the Sanpower Group on 2 September 2014, marking an exciting beginning for the company under Chinese ownership.

    “This is an exciting time for House of Fraser and the opening of the store in Nanjing is a strong way to finish 2016. We are confident that our first store will clearly demonstrate the unique status that House of Fraser can achieve in the market, and will be a standout platform for our brand partners,” said Frank Slevin, Chairman of House of Fraser UK, in a media statement.

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  • Hamleys Hong Kong takeover

    Hamleys Hong Kong takeover

    Hamleys – the world’s oldest toy retailer – has been bought by a Hong Kong investor. As rumoured last week, the business has been sold to interests connected with the Sanpower Group in China’s mainland, which last year acquired UK department store House of Fraser.

    The buyer is C.banner International Holdings Limited, a Hong Kong-listed Chinese private enterprise, which describes itself as a strategic partner of Sanpower.

    The new owners plan to speed up the international rollout of the brand – and to pursue opportunities for concessions in department stores.

    In a statement, the new owners say they hope House of Fraser will “become C.banner’s priority business strategic partner”.

    “By virtue of the acquisition of Hamleys, C.banner will expand its retail businesses, and consider establishing deep relationships with department stores, so as to further promote the win-win development of its products and department stores through their brands and channels,” the company said in a statement.

    “C.banner hopes to implement its global brand strategy through introducing the products of House of Fraser and Hamleys, as well as capitalising on their channels to export its products overseas.

    “In the future C.banner will continue to actively explore business opportunities at home and abroad through mergers, acquisitions, strategic partnerships, as well as the establishment of other business relationships with leading retailer brands, to further implement its global brand strategy.”

    French owner Ludendo, which rescued Hamleys from a collapsed Icelandic bank three years ago for just £60 million, has already grown the business into an international toy brand, opening stores in Russia, Malaysia, Singapore – and last week in Vietnam. The company now has 53 stores owned or franchised. It turned over £62 million last year and posted a profit of £4.5 million.

    Founded in 1760 as Noah’s Ark, Hamleys opened its Regent St flagship store in London’s West End in 1881.

    *Photo: From left to right: Chen Yixi, chairman of the board of C.banner, Yuan Yafei, chairman of Sanpower Group, Gudjon Reynisson, CEO of Hamleys, Jean Micdhel Grunberg, president of Lundendo, Rudolph Hidalgo, chief executive director of Ludendo, at a press conference announcing the sale.

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  • House of Fraser China closer to debut

    House of Fraser China closer to debut

    UK department store retailer House of Fraser has confirmed it will open three stores in China.

    The first will be in Nanjing, the home of House of Fraser’s Chinese owners Sanpower after its £489 million buyout of 89 per cent last September.

    The second store will be in Chongqing and the third in Xuzhou, which is scheduled to open in 2017.

    A second franchised store is also planned for Abu Dhabi.

    House of Fraser revealed record annual profits this week, driven by a 32 per cent increase in online sales and like for like sales up 5.8 per cent to £1.3billion. It reported a record gross profit of £460.2 million. Own brand sales – for Linea and Army & Navy – rose 10 per cent.

    House of Fraser chief Nigel Oddy said the company is excited about its future prospects as it embarks on its next phase of growth internationally.

    Oddy joined House of Fraser in february after a career with Marks & Spencer which included a term as head of its retail operations in Hong Kong and involvement in buying, giving him extensive knowledge of greater China.