House of Fraser’s owner is planning to dispose of its majority stake in the troubled chain, selling it to a Chinese tourism development company.
Nanjing Xinjiekou Department Store, 27% of which is owned by Sanpower Group, is in advanced stages of discussions to sell its 51 percentage points of its 89% stake to tourism firm Wuji Wenhua.
It cited Wuji Wenhua’s “vast experience in the leisure sector” and its “acess to a large network of travellers” as the rationale behind its decision.
The Chinese outfit acquiredin 2014. At the time, the plan was to roll out 50 House of Fraser stores across China. So far, just one has been built.
House of Fraser has been grappling with a rapidly changing market, a store portfolio which consists of many unprofitable outlets and a drain of talent at the top.
All of the executive team at the time of the sale have now exited. The current team is led by Alex Williamson, who joined the department store last summer from Goodwood Estate.
The retailer was hit by a credit ratings downgrade in December and fared poorly over Christmas, when in-store sales shrunk 2.9% and online sales slumped 7.5% in the six weeks to December 23.
It has asked landlords for rent reductions to alleviate financial pressures and has appointed Rothschild to refinance £225m of its £390m debt, set to mature next July.
A spokesperson for Nanjing Cenbest said: ”We welcome the potential new collaboration between Nanjing Cenbest and Wuji Wenhua. And although Nanjing Cenbest and Wuji Wenhua are still in discussions, we believe that Wuji Wenhua can be a strong strategic equity partner as they possess vast experience in the leisure sector and have access to a large network of travelers.
”This additional partnership will help House of Fraser to further internationalise its brand to reach out to an increasingly large international consumer base. We are very proud of our continued stake in the 169 year old House of Fraser brand, and we are supportive of the excellent leadership team at House of Fraser in its plans to transform the House of Fraser brand and make it a new commerce leader in this new century.”
A spokesperson for House of Fraser added: “This will have no impact on the day-to-day operations or strategic development of the House of Fraser business in the UK and Ireland. It is business as usual.”