House of Fraser ‘mulling return to stock market’

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PREMIUM department store chain House of Fraser could return to the stock market after an absence of nearly a decade.

The 161-year-old business, which has been the subject of takeover interest in the past year, could be valued at between £200m and £300m in a stock market flotation, analysts believe.

Executive chairman Don McCarthy and his family hold a 20 per cent stake with a further 49 per cent in the hands of representatives of failed Icelandic banks, who took control of the shares when previous owner Baugur went bust.

The retail business, which generates sales of £1.2bn a year, has 61 UK and Ireland stores - including Hull, Grimsby, Leeds, Sheffield, Skipton and Huddersfield - covering nearly five million square feet of selling space. It employs 7,300 people as well as 12,000 concession staff.

House of Fraser, one of Britain’s best known retailers, is believed to have held takeover talks in recent months with Sports Direct tycoon Mike Ashley and the Qatari royal family but is now said to be considering a return to public ownership.

In 2006, it was snapped up by a group of investors led by Icelandic tycoon Jon Asgeir Johannesson’s Baugur Group in a £350m deal.

Other chains in the Baugur portfolio included toy store Hamleys and frozen foods chain Iceland.

A Sunday newspaper report said the float plans were being led by Mr McCarthy but are at an early stage and may come to nothing.

Other big shareholders include Scottish tycoon Tom Hunter and Lloyds Banking Group, which inherited its stake after Halifax Bank of Scotland helped finance Baugur’s takeover deal.

The chain first listed on the stock market in 1948 and remained a public company until it was bought by Mohamed al-Fayed in 1985.

House of Fraser is moving with the times and its decision to invest in its online platform is paying off with e-commerce sales increasing 53 per cent last year. The chain reported a 4.2 per cent hike in earnings before interest, debt, tax and amortisation of £61.1m in the year ending January 26.

“We are confident that the group’s business model, with its strong multi-channel operations, is highly relevant to changing consumer habits and the ongoing rapid growth in internet shopping,” wrote Mr McCarthy in the annual report.

“We also remain positive that the group will continue to deliver growth in sales and margins with our strong focus on further multi-channel developments and the continued planned expansion of our high margin house brand business.”