Fears over House of Fraser future
The retail group which owns House of Fraser is reported to be on the brink of administration.
Investment company Baugur, which is based in Iceland, is struggling under the burden of a £1 billion debt and has applied for protection from creditors.
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House of Fraser in Cabot Circus, Bristol
The House of Fraser group, in which Baugur has a 34 per cent stake, has the anchor store in the £500 million Cabot Circus development which has 350 staff.
It also owns 14 per cent of frozen food chain Iceland, which has ten stores across Bristol and 36 per cent of fashion label All Saints, which has two Bristol branches.
Baugur's interests also include minor stakes in other names including Coast, Karen Millen, Oasis, Principles, Warehouse and Shoe Studio, as well as equity stakes in other listed retailers such as French Connection and department store chain Debenhams.
Fears for Baugur's future mounted on Wednesday after talks with banks over the debt collapsed.
Baugur also has stakes in toy store Hamleys, jewellery chain Goldsmiths and fashion store Whistles.
It employs around 50,000 people worldwide in more than 3,500 stores, with a total turnover of £5.4 billion.
The struggling group has applied to enter the "moratorium" process in Reykjavik – which offers protection from creditors in a similar fashion to Chapter 11 bankruptcy procedures in the US.
The group has an initial three weeks to find a way forward, but its current woes could mean a fire-sale of its UK retail assets.
Baugur has been hit by the drying up of credit caused by the collapse of Iceland's banking sector, which has affected its ability to borrow money.
It has also been hit in recent months by withdrawal of cover by credit insurers.
Credit insurance is taken out by suppliers, especially to the retail sector, to insure against non-payment by the stores they are supplying.
If suppliers are unable to take out such insurance, they find it even more difficult than usual to take out loans from banks.
But one credit insurer has predicted that the retailers will be able to continue trading, despite Baugur's protection from creditors.
A spokesperson for the credit insurer Altradium said: "[We] remain supportive of the viable businesses trading within it, notably some of the well known names on the British High Street."
"We do not foresee that Baugur's shareholding will negatively impact the ongoing trade of these businesses and anticipate the transfer of shares in an orderly fashion."
8 Comments
by Richard, Bristol
Thursday, February 05 2009, 10:52AM
“Martin, The Shire.
Sorry my ignorance... I was relating to newspaper headlines from December.
Obviously we want Cribbs to do just as well.”
by Martin, The Shire
Thursday, February 05 2009, 9:16AM
“John Lewis at Cribbs struggling? It's one of their most profitable stores??”
by Mark, Bristol
Thursday, February 05 2009, 12:10AM
“Media sensationalism at its best.
Some group who owns 35% are going under, someone will buy that 35% as HoF is a viable business still, just like a lot of the companies that Baugur have invested in.”
by Richard, Bristol
Wednesday, February 04 2009, 11:35PM
“Hi Wibble,
lol, thanks... it's a real shame to hear this of course but let's hope Sir Philip Green's plans to buy this part of Baugur go ahead sooner than later.
With John Lewis struggling at Cribbs Causeway maybe they'll look to open a new store here? Fear not, you only have to look at the empty John Lewis store in Broadmead when they first moved to know department stores will be queuing up to take this on if it's vacant.
In ten years that store has been Bentalls and House of Frazer after leaving Clifton. Now it's Primemark and don't laugh, I've been to Primemark in Oxford Street and it's actually one of the best managed stores in the area i.e. feel, layout, professionalism and price of course.”
by Gordon Brown, London
Wednesday, February 04 2009, 6:02PM
“Don't worry, I'll bail them out with some more of this 'tax payers' money I keep getting every month. I get so much of it I don't know what to do with it!”
by Sam, Bristol
Wednesday, February 04 2009, 1:55PM
“Maybe if they ever turned the lights off in their stores (All Saints et al) They'd have a few quid to spare! Turn the lights off shopkeepers.”
by anon, bristol
Wednesday, February 04 2009, 1:17PM
“Didnt take long did it for maybe the big store in C C to shut up shop”
by wibble, Poundstretcher
Wednesday, February 04 2009, 1:00PM
“Fear not, I'm sure Bristol's resident ra-ra Richard will be along in a minute to say that shoppers of the world will still be winging their way from around the globe to visit the award winning worlds #1 shopping center.”