LONDON — With deep pockets and ambitious plans to expand internationally, Galeries Lafayette has entered into talks to acquire Britain’s House of Fraser chain of department stores.
Industry sources said this week that House of Fraser has been seeking to rationalize its shareholder base and seek new, strategic investors that will add value to the business and help it evolve as a multichannel retailer.
House of Fraser is pursuing a dual strategy of preparing for an initial public offering while it holds talks with trade buyers. The sources said a deal should be sealed in the first quarter of 2014.
Sources said House of Fraser is looking for an enterprise value of 400 million to 450 million pounds, or $652 million to $733 million at current exchange, and that both options — IPO or sale — remain attractive.
Rothschild is handling the IPO process, while House of Fraser is dealing with the trade sale route in-house.
“House of Fraser is very focused on doing what is right for the company, and will be seeking a reasonable and fair value” in whatever path it takes, said a source familiar with the retailer, which has 61 stores in the U.K. and Ireland and annual sales of 1.2 billion pounds, or $2 billion.
Another source said House of Fraser entered into talks with Galeries Lafayette because “they understand the department store business,” and there was potential to leverage House of Fraser’s retail network and name abroad.
House of Fraser has also built up a successful e-commerce business, houseoffraser.co.uk and a houseoffraser.com concept store, a mobile website and mobile app. In the three months to Oct. 26, online sales rose 31 percent.
House of Fraser’s buy-and-collect sales, a rapidly expanding distribution channel in the premium and luxury sectors, were up 87 percent in the year to Jan. 26, while overall Web sales were up 53 percent in that period.
Spokesmen for the French and British department stores declined to comment on the reports of a sale, which first appeared in the Financial Times and the Times of London on Wednesday.
Galeries Lafayette has been on the acquisitions trail since the sale in 2012 of its 50 percent stake in retail chain Monoprix, which left it with a cash pile estimated at 1 billion euros, or $1.38 billion.
It is also in the process of selling its 50 percent stake in consumer credit company LaSer Cofinoga.
Late last year, a bid by Groupe Galeries Lafayette to acquire rival Printemps was rejected in favor of a buyout by Qatari-backed investment fund Divine Investments SA, or Disa.
Groupe Galeries Lafayette has also stated ambitions to acquire mid- to high-end brands in ready-to-wear and accessories. The retailer already controls the Royal Quartz and Louis Pion watch chains and French fine jewelry chain Didier Guérin, in addition to its department stores, Galeries Lafayette and BHV.
The French group is also increasing its development abroad, with the opening of a unit in Beijing in October and further planned openings in Istanbul and Doha, Qatar, in 2015.
House of Fraser, which stocks fashion brands including Michael Kors, Tommy Hilfiger, Alice by Temperley and Phase Eight, has a broad shareholder base. Its chairman is Don McCarthy and his family holds nearly 20 percent of the company’s shares. Among the store’s other shareholders are private individuals and the Bank of Scotland.
A Galeries Lafayette and House of Fraser tie-up would come on the heels of a similar deal earlier this year when Italy’s La Rinascente bought the Copenhagen-based department store Illum, with an eye to creating a luxury store group.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews