Beattie deal loses House of Fraser £72m

DEPARTMENT store group House of Fraser has revealed a £72m loss on its acquisition of James Beattie, the clothing retailer it bought near the top of the market in 2005.

The mammoth write-down more than wipes out the £69.3m price tag House of Fraser paid for the business five years ago, and reflects a slump in trading at Beatties’ 11 remaining outlets – most of which have been rebranded as House of Fraser – as well as a devaluation of its property assets.

The decision by executive chairman Don McCarthy and chief executive John King to absorb the loss marks an attempt to draw a line under the ill-fated takeover. The purchase of Beatties was masterminded by House of Fraser’s previous management team, led by chief executive John Coleman, who paid a 44.8 per cent premium to the company’s undisturbed share price when he bid 168p per share in August 2005. McCarthy and King inherited the deal after they were appointed when Icelandic retail investor Baugur took House of Fraser private in 2006.

The hit from Beatties added up with other charges to push House of Fraser £87.1m into the red before tax for the year to February 2009, according to accounts just filed with Companies House. The directors decided against paying out a dividend, compared with £172m distributed a year earlier.
The accounts said: “The revenue stream from James Beattie has reduced over the period since acquisition, and its performance has been further impacted by a difficult economic environment.”

● After Baugur collapsed in 2009, its 34 per cent stake passed to Landsbanki. Royal Bank of Scotland and management also hold shares
● Since taking over, CEO John King has moved the firm to new headquarters in Baker Street