House of Fraser in talks with alternative investors after deal collapses

BRITAIN-CHINA-RETAIL-BUSINESS-HOUSE OF FRASER

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ParcelHero's head of consumer research, David Jinks, says: "Clearly the latest credit agency warnings are bad news for House of Fraser, its investors, and those loyal shoppers who continue to visit its stores.

British retailer House of Fraser said on Wednesday it was looking at other options to obtain investment after C.banner cancelled planned fundraising for its deal to become a majority shareholder in the department store.

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

The plan was for Chinese fashion conglomerate (and also the owner of Hamley's toy store) C.banner International Holdings Limited (C.banner) (HKG:1028), to take control of the struggling department store chain and inject £70m of much-needed cash into rescuing it.

The group, which is now controlled by Chinese conglomerate Sanpower, said in June that it was shutting 31 of its 59 stores across Britain and Ireland, risking the loss of 6,000 jobs.

The company now employs 17,500 staff and 6,000 would have been axed in the original plan. The failing retailer has suffered another blow as its potential new owner has walked away from a deal which may have just rescued the store.

On Monday, it was revealed that House of Fraser had been approached by Sports Direct founder Mike Ashley over a new investment deal that would provide a £50m loan.

As veteran retail analyst Richard Hyman summarised back in June, House of Fraser's difficulties can be explained by a lack of investment, declining relevance with shoppers, a lack of brand differentiation and a failure to focus on the store's core customer.

Sources said the funding shortfall at House of Fraser has raised doubts over its ability to stock its stores. Mike Ashley's retailer had previously offered a 50 million pounds secured loan.

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