House of Fraser (UK) Targets Middle East Franchise Expansion
07 Mar 2010 - House of Fraser is set to announce plans to expand into the Middle East, as the department store chain aims to expand its customer base by taking advantage of demand for designer brands in the region.
The privately owned retailer, which began life as a Glasgow drapers store in 1849, could open its first stores in the Middle East in spring 2012, after signing a franchise agreement with Retail Arabia International, the retail venture of Daud Arabian and Gulf General Investment.
Baugur’s 33 per cent stake in House of Fraser was taken over by Landsbanki after the Icelandic investment group collapsed in 2009. Don McCarthy, chairman of House of Fraser, has a 22 per cent stake, while Sir Tom Hunter, the Scottish entrepreneur, holds 10 per cent.
A person familiar with the company said House of Fraser was looking into opening franchise stores in a number of Middle East locations, including Cairo, Riyadh, Abu Dhabi, Oman and Qatar.
The person said the group wanted to launch its expansion in the region because of consumer appetite there for luxury brands in a premium department store setting.
Many UK retailers see the Gulf region as a fertile market, in spite of jitters in financial markets after the crisis in Dubai late last year. House of Fraser’s planned expansion would see it go head-to-head in some locations with rival Debenhams, which has franchised stores in 20 countries including Saudi Arabia, Qatar and the United Arab Emirates.
Earlier this month it emerged that House of Fraser was in talks with lenders to renegotiate its banking covenants in order to fund the expansion of its own-brand ranges as it embarks on a new three-year growth strategy.
In the year to January, the retailer is expected to generate earnings before interest, tax, depreciation and amortisation of about £70m ($108m), up from £55m the previous year.
Financial Times
