LONDON — House of Fraser, the British department store chain that’s poised to become part of China’s Sanpower Group, is this week set to reveal “record” sales for the year ended in January, according to a source familiar with the company.
The store, which posted sales of 1.2 billion pounds, or $2 billion, in 2012-13, will release its 2013-14 figures at the same time that Nanjing Cenbest, a publicly quoted subsidiary of Sanpower, makes an official announcement to the Shanghai Stock Exchange regarding its intention to acquire the British retailer.
The deal, revealed in a joint statement from Nanjing and House of Fraser, is due to close in four months, and is subject to conditions including the approval of Nanjing Cenbest shareholders and Chinese regulatory clearances.
Yuan Yafei, founder and chairman of Sanpower, underlined his global ambitions for House of Fraser in the statement Saturday.
“We have always been looking to invest in strong brands like House of Fraser, and take them to the next level of growth. With House of Fraser, we see significant opportunities to develop the business further and replicate the already successful model in international markets, in particular in China.
“We are very much looking forward to working closely with [House of Fraser chief executive officer] John King and his management team to enhance the business and unlock [its] potential to become a leading global brand,” he said.
House of Fraser has 60 locations across the U.K. and Ireland, and a robust Internet business. In the six months to July 27, online sales excluding value-added tax increased by 57 percent, with click-and-collect services driving higher footfall into the store, the company said.
Jonathan Smith, director of Hot Pot Digital, a London-based agency that specializes in marketing to Chinese consumers, said it’s a key time for Chinese businesses to go international, and pointed to the acquisition of Sunseeker Yachts by the Chinese conglomerate Dalian Wanda in June.
Smith said the big Chinese investors tend to have shopping lists, and on those lists are foreign brands, “so they can call themselves international groups. House of Fraser is right there on Oxford Street. It’s a badge of honor, a heritage brand, and [Sanpower] gets to add the address to its portfolio.”
He said brands with heritage are particularly seductive for the Chinese, who are rapidly developing a variety of industries and businesses. “They are not able to develop a sense of heritage, so the traditional British brands stand out. They [want] names with stories to go with them,” Smith said.
According to British press reports, Sanpower plans to open at least 20 shops across China under the name Oriental Fraser, with the first one in the company’s home city of Nanjing.
Smith said the Chinese consumers were more than ready for a new department store offer.
“Consumers in places such as Beijing, Shanghai and Guangzhou are used to malls, to multibrand retailers and to spending the day somewhere they know well. They know Harrods, Saks Fifth Avenue and Bloomingdale’s — department stores with heritage appeal —and they are used to combining tourism with shopping,” he said.
The House of Fraser board has already approved the transaction, and the store’s executive chairman Don McCarthy said he would step down on completion of the deal.
Going forward, McCarthy said the plan is to continue to grow and invest in the business in the U.K. and Ireland. He said that would “provide a strong platform from which to expand the brand in international markets and to further develop our multichannel, stores and premium fashion offering.”
Some, however, believe the future might not be so rosy for House of Fraser’s new owners.
George Wallace, ceo of the European consultancy MHE Retail, said that in five years’ time, it is likely the retail landscape will be further skewed toward e-commerce, “and the Chinese will likely find themselves with a lot of expensive [store] space to maintain, space that needs investment and refurbishment. Looking forward, the cards are stacked against having a big portfolio of large stores. It’s a difficult model if you want to be profitable.”
Wallace pointed to John Lewis, another profitable British department store chain with 41 stores and a thriving click-and-collect business. He said that company’s smaller portfolio of stores in thriving cities, coupled with its strong Internet offer, was a more promising proposition than House of Fraser, which has more stores, some of which are located in towns that are in decline.
“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
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye