Hamley’s owner C. Banner has pulled out of its investment plan for House of Fraser, throwing the future of the department chain into doubt.
The Chinese fashion conglomerate had initially offered up plans to take control of the House of Fraser brand with a £70 million cash injection. However, it has since stated that it was no longer proceeding with the investment.
The deal would have involved closing 31 of its 59 stores, with the loss of 6,000 jobs; the result of a negotiation with landlords struck upon in June this year.
Last week, Sports Direct boss Mike Ashley hinted at his own plans to take a majority stake in the retail chain, putting forward what he considered ‘better terms’ than those offered by C. Banner.
Sports Direct already holds an 11.1 per cent stake in House of Fraser.
Do or die time
This morning the parcel delivery comparison site ParcelHero has said that House of Fraser ‘must adopt a digital-led approach or die’, following a warning from the credit rating agency Moody’s stating that the store was ‘technically in default.’
ParcelHero has said that the crisis House of Fraser now finds itself within “clearly reflects the inability of older institutions to move as fast as modern e-commerce sites.”
Head of consumer research at ParcelHero, David Jinks has said: “In order to survive, House of Fraser needed a £70 million investment promised by its Chinese investor C. Banner, or hope Sports Direct founder Mike Ashley would make a much-needed loan. But apart from needing urgent cash, the true heart of the problem for House of Fraser is outdated stores and an even more outmoded website.
“It is hoped House of Fraser resolves its funding issues successfully; but even if it does manage to do so, through Mike Ashley or a possible merger with Debenhams, it must still close 31 stores it plans to axe and drag its web functionality into the 21 century.
“Only then can House of Fraser offer the seamless brick and click multiplatform approach to sales that is essential for modern retailers.”