House of Fraser Group swung to a £43.9m pre-tax loss last year as the Brexit vote, terrorist attacks and online competition weighed on the embattled department store business.
The loss is compared with pre-tax profits of £1.5m the previous year.
It is unclear how closely the results in the C.banner announcement reflect performance at the core UK business. House of Fraser Group is the holding company of the UK and Ireland operations, but its numbers include the start-up and operating costs of HoF China.
They do not include the licence fee payable from HoF China to HoF UK for the use of the name in China, nor the sale of house brands for £25m, because the businesses have different year-ends. HoF Group’s year ended on December 31, 2017, while HoF UK’s year ended in January 2018.
The poor group results came as House of Fraser prepares to launch a company voluntary arrangement (CVA) in a bid to close around 20 of its 59 stores and slash its rent bill.
C.banner has agreed to acquire a 51% stake – valued at £141m – in the ailing business, but new investment is dependent on the CVA getting the go-ahead.
C.Banner blamed Brexit and a rapidly evolving retail market for House of Fraser Group’s losses.
It said: “The Brexit referendum and the UK’s resultant decision to leave the European Union and the terrorist attack in London, combined with a rapidly evolving retail market, produced a period of uncertainty and volatility that resulted in a difficult trading environment for the whole retail industry in the UK.”
It argued that the impending store closure plan would make House of Fraser “more stable” and enable it to take advantage of its “well-known brand to capture growth potential”.
C.banner hopes a tie-up with the department store chain will create cost savings in its footwear and toys businesses, as well as in back-office functions.