House of Fraser chiefs are considering whether there would be an appetite for an IPO of the department store business, almost a decade after it was taken private.

House of Fraser chiefs are considering whether there would be an appetite for an IPO of the department store business, almost a decade after it was taken private.

In some ways the omens look good for a float. After an extended punishing period for retail stocks, investors are taking a brighter view. Wheat has been sifted from chaff as weaker retailers bit the dust, many of those remaining are at the top of their game and retail shares generally have been up over the year.

House of Fraser look as if it is in decent shape. In May the retailer reported record full-year sales, a record gross profit and EBITDA up, while net debt edged down.

The success of an IPO would of course depend upon the retailer’s future prospects. In that respect too there are grounds for optimism. The retailer has carved out a position for itself with a distinct offer of premium and own-label brands. Online, it has been among the innovators with collection-only stores and imaginative delivery options.

Unlike Debenhams, the other big quoted department store group, House of Fraser doesn’t have much of a presence internationally. That could change though. A store will shortly open in Abu Dhabi and the hope must be that more can follow and the retailer’s upscale positioning should ensure appeal in well-heeled overseas markets.

However, it may not be plain sailing for it to float. As independent analyst Nick Bubb notes, there is a perception that there have already been unsuccessful attempts to sell or bring new investment into House of Fraser.

It has been linked to Sports Direct tycoon Mike Ashley, for instance. However, no deal has been done and therefore there may be wariness in the City about why investors there should buy in when others have not.

But the successful AIM listing of Bargain Booze owner Conviviality Retail shows the City’s doors are not closed to retail flotations, as long as the shares are priced to go.

After the resentment sparked in the Square Mile after rival Debenhams’ IPO, House of Fraser’s bosses will have to steer a canny course to ensure a City welcome.