The Chinese owner of struggling British department store chain House of Fraser intends to sell its majority stake to another company from China, according to a Chinese stock exchange filing.
Less than four years after buying the well-known British store, which was founded in Glasgow in 1849, Nanjing Xinjiekou Department Store Co. is selling a 51 percent stake to tourism development company Wuji Wenhua.
Nanjing Xinjiekou is a subsidiary of private business conglomerate Sanpower Group, which bought an 89 percent stake in House of Fraser in 2014 for 480 million pounds (666.9 million U.S. dollars) — a record for Chinese investment in foreign retail.
In 2013, House of Fraser opened its first overseas branch, in Abu Dhabi’s World Trade Center Mall, and after several delays, its first China branch was opened in Nanjing in December 2016, when Sanpower chairman Yuan Yafei announced plans to add a further 50 Chinese stores under the name “Oriental Fraser”.
However, House of Fraser has struggled with a challenging retail environment in the United Kingdom, where bricks-and-mortar retailers have been hit by the rise of online shopping.
The last decade has seen the collapse of several well-established British high street brands including department store British Home Stores, high-street retailer Woolworths, electronics retailer Maplin, and Toys R Us UK. The futures of retailers Debenhams and Mothercare are also uncertain.
In January, House of Fraser reported disappointing Christmas sales, down 2.9 percent on the previous year. That news came after ratings agency Moody’s had, in early December, already downgraded House of Fraser’s credit rating due to “weak results in the first three quarters of its fiscal year”.
House of Fraser announced it would cut the number of its high street shops by a third in an effort to reduce its rent bill following the slump in holiday sales.
The company closed stores in Leicester and Buckinghamshire last year, following a tough 2016 in which profits plunged 46 percent in the first half of the year.
At the time, former House of Fraser chief executive Nigel Oddy said that uncertainty caused by Britain’s referendum vote on European Union membership was partly responsible for “extremely volatile trading”.