House of Fraser reportedly seeks financial lifeline from lenders

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House of Fraser Oxford Street

House of Fraser has approached specialist lenders in search of a multi-million-pound lifeline, it has been reported.

The mid-market department store, which reported a poor season of trading over Christmas with stores sales down -2.9% and online sales down -7.5%, has approached turnaround firms such as Alteri Investors, which is backed by the US hedge fund Apollo Global Management, according to The Sunday Times.

It is reported that the department store is seeking up to £40m in emergency funding, however the recent spate of closures and restructurings on the high street, such as the CVA of fast fashion retailer New Look, are likely to deter lenders it is reported.

In addition Sky News reports that a group of current lenders that is believed to include HSBC and Industrial and Commercial Bank of China have drafted in financial advisers EY over concerns about the group’s financial position. House of Fraser has hundreds of millions of pounds of debt, including a publicly traded bond of £350m, which coupled with tough trading conditions is causing nervousness among the lenders.

The business, which operates 59 department stores, has been majority owned by Chinese group Nanjing Xinjiekou, part of Sanpower, since 2014. Earlier this month Nanjing suggested it would sell a 51% stake in House of Fraser to Wuji Wenhua, a Chinese tourism group.

There have been a number of high-profile changes in personnel at the head of House of Fraser in recent months. Last summer Alex Williamson was brought in as CEO from sporting venue Goodwood, following by a new CMO Paddy Earnshaw, who joined in the autumn from Doddle, indirectly replacing former chief customer officer David Walmsley.

Finally former Fenwick managing director David Walker-Smith was appointed chief product and trading officer last month, replacing Maria Hollins who left the business in January.