Billionaire business mogul could save House of Fraser

Jenners is under threat of closure. Picture: TSPL
Jenners is under threat of closure. Picture: TSPL
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Billionaire retail mogul Philip Day is understood to be waiting in the wings to swoop in with a rescue bid for struggling retailer House of Fraser, including city flagship, Jenners.

Mr Day, who also controls fashion chains Jaeger and Peacocks, is in talks with the retailer over a potential investment after Hamley’s Chinese owner C.banner pulled out of a £70m rescue deal, leaving the retailer on the brink of collapse.

He has been reported as one of a small number of figures in talks with the department store chain.

Mr Day has earned a reputation for buying up distressed chains.

But expert retail analyst Richard Hyman from Richard Talks Retail said unless Mr Day can trade Jenners at minimal cost it would be a difficult proposition to see succeeding.

He said: “The problem with “rescuing” or “saving” a business is that these words tend to ignore harsh economic realities.

“House of Fraser isn’t viable as it stands. The options open are likely to be various shades of grim, even if they are presented as something more positive.

“Department stores are extremely expensive retail formats – big buildings in expensive locations that cost lots just to keep open.

“The bottom line is – can anyone generate around double the business the current leadership team has managed without throwing money at it?

“The answer is no I’m afraid.

“Anyone saving the business would need a return on their investment.

“I can’t see how that could be achieved.

“Mr Day specialises in tertiary retail from tertiary locations.

“Unless he can trade in Jenners for more or less no cost, I can’t see how it works.

“However, there are usually opportunities to make money during a process which shuts a business down.

“Such a process might take some time and might be presented as a “rescue”.

Mr Day’s name is the latest to be linked with the business after retail tycoon Mike Ashley, the founder and chief executive of Sports Direct, has reportedly offered House of Fraser a £50 million loan in recent weeks.

Mr Hyman added: “As for Mr Ashley, he will want to get the money back he spent on buying his 11 per cent stake.

“That might well involve taking ownership of the business/stock for a knock down price.

“It might involve him taking a few stores but it’s hard to see the House of Fraser business as it currently stands surviving for much longer.”

The closure of 31 of its existing 59 stores was announced in June, resulting in an estimated 6,000 job losses. If a new investor cannot be found, the company would have to go into administration and almost certainly close the remainder of its stores.

Jenners on Princes Street and two other Scottish stores are also under threat – one in Glasgow and one at Loch Lomond.

In a statement on Wednesday, the department store confirmed that C.banner had withdrawn from talks, but said it was “in discussions with alternative investors and is exploring options to obtain the required investment on the same timetable”.