House of Fraser’s new owner issues profit warning | City A.M.
House of Fraser’s future prospects have been dealt another blow after its owner issued a profit warning, throwing its emergency funding into doubt.
C.banner, the Chinese company which also owns Hamleys, issued a statement to the market today warning its profits will be lower and cancelling a planned placing due to the plunge in its share price.
The cancellation of the placing makes it less likely that House of Fraser will receive the £70m cash injection that was promised by C.banner when it took a controlling stake in the retailer earlier this year.
House of Fraser said today that it is seeking alternative sources of funding.
The extra cash has already been delayed due to the legal challenge to House of Fraser’s company voluntary arrangement (CVA), through which it had planned to close 31 of its 59 stores.
The chain’s most likely saviour at the moment appears to be Sports Direct founder Mike Ashley, who has been in discussions about providing funds for a month. However it is understood that the talks are not advanced.
House of Fraser said it is “in discussions 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.”