Modern Marketing

House of Fraser cash injection from Chinese backer falls through but ad review to go ahead

By Jennifer Faull | Deputy Editor

House of Fraser

|

house of fraser article

August 1, 2018 | 3 min read

House of Fraser’s (HoF) promised £70m cash injection from Chinese conglomerate C.banner has fallen through, putting the brand in a precarious position after it was forced to enter a company voluntary arrangement (CVA).

The much-needed funds were promised on the condition that as part of the CVA the retailer would slash 6,000 jobs, close 31 of its 59 stores and reduce rent on 10 that would remain open; but a consortium of landlords protested the rent reductions, leading to delays on the investment.

C.banner has since confirmed that it has decided to no longer proceed with the investment. The Chinese company also issued its own profit warning within the same hour.

HoF

House of Fraser - review to go ahead despite loss of £70m investment

HoF said it is now in talks "with alternative investors and is exploring options to obtain the required investment on the same timetable.”

“Discussions are ongoing and a further announcement will be made as and when appropriate,” it said.

Sports Direct founder Mike Ashley is reported to be among those to be mulling over the provision of cash – he has an 11% stake in HoF – as it frantically tries to muster £50m to meet its £25m quarterly rent bill by the end of September, finance other debts, and fund its Christmas trading period.

Advertising review to go ahead

Despite the uncertainty, a spokesman for the brand said that the ongoing review of its advertising agency roster had not been postponed.

HoF dropped 18 Feet & Rising less than a month after it announced the CVA.

Chief marketing officer Paddy Earnshaw said at the time that the business had found itself at “a natural crossroads” and described the call to pitch as an “an opportunity to reinvigorate and shake-up our thinking by seeking fresh perspectives”.

The latest marketing news and insights straight to your inbox.

Get the best of The Drum by choosing from a series of great email briefings, whether that’s daily news, weekly recaps or deep dives into media or creativity.

Sign up

“We're looking forward to seeing where this next stage takes us to answer the modern needs of our customer base,” he added.

It is not known the agencies that have been invited to pitch for the business.

Modern Marketing

Content created with:

More from Modern Marketing

View all

Trending

Industry insights

View all
Add your own content +