Hunter 'not selling House of Fraser stake'

Published on Friday 27 August 2004 00:56

SOURCES close to Scottish entrepreneur Tom Hunter denied speculation yesterday that he is looking to offload his 11 per cent stake in the retail giant House of Fraser.

The rebuttal came after city analysts speculated this week that Hunter, who would make an estimated 30 million from his holding now, might be considering selling his stake ahead of more difficult times for the company.

Hunter, who has tried unsuccessfully in the past to take over HoF and is now its largest shareholder, is thought to have made 8m on his investment in the chain, with the stock gaining 25 per cent in the last year.

Nick Bubb, a retail analyst with Evolution Beeson Gregory, suggested the time might be right for Hunter to sell.

"He has made a decent profit," Bubb told The Scotsman, adding that the Scottish firm’s share price could come under pressure from a sector-wide drop-off in sales over a colder-than-usual summer and a potential takeover bid for Allders property group.

Speculation of a move on struggling Allders, which analysts fear could depress HoF’s stock price in the near-term, has been fuelled by HoF’s move to appoint a second broker, Investec, last month. The company has already engaged in talks with Minerva, the 60 per cent-shareholder of Allders.

Some analysts believe that Hunter could benefit from holding on to his stake.

Gillian Hilditch, an analyst at Arbuthnot, issued a "strong buy" recommendation for HoF yesterday, saying that anticipated new terms for the store card negotiated 13 years ago with GE could add as much as 89 pence to the company’s share price.

She highlighted the deal between Marks & Spencer, where the store negotiated a 50/50 profit-share deal. Currently, HoF makes no profit from its store card, under the original terms, yet has approximately 1 million cardholders.

Hilditch estimates that GE makes as much as 20m in yearly operating profit from the HoF card, which was relaunched last year, and is likely to renegotiate a much more favourable deal with HoF, bringing in the retailer as much as 7m net.

Its shares were flat at 114.25 pence yesterday.

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