EDINBURGH’S most famous store, Jenners, is to be sold to its rival House of Fraser for up to £100 million, ending the family-run institution’s 167 years of independence.
Managers broke the news to staff at a meeting in the shop’s grand hall yesterday morning, after the companies released a joint statement to the stock exchange. The owners of the world’s oldest independent department store are thought to have accepted in principle a "very good" offer.
As well as Jenners’ underperforming six-storey building in Princes Street, the sale will include its more successful outlets at Glasgow and Edinburgh airports and at Loch Lomond.
The purchase is likely to prompt a shake-up of shops in Princes Street, where House of Fraser already has a department store. Jenners’ staff are understood to be broadly positive about the move, which could see a much-needed injection of cash into the main store.
But stunned customers said it would "bring the shutters down on Edinburgh’s history".
The deal provides an escape route for the Douglas Miller family - owners of Jenners since 1881 - who have seen profits squeezed by the steady decline of quality shopping in Princes Street and fierce competition from a revamped John Lewis and a slew of new fashion stores, including Harvey Nichols, Cruise, Louis Vuitton, and Armani and Hugo Boss.
House of Fraser said that the Jenners name would continue, although analysts said it was possible the brand could be used instead to market specific products, such as high-end fashion or Scottish food and gifts. Until now, House of Fraser has rebranded all refurbished regional department stores under its own name.
The companies’ joint statement read: "The board of House of Fraser plc announces that it is in advanced negotiations with Jenners Princes Street Edinburgh Limited with regard to the possible acquisition of the retail businesses of Jenners. The Jenners businesses include its store on Princes Street in Edinburgh, and outlets at Glasgow and Edinburgh airports and Loch Lomond Shores, all of which would continue to operate under the Jenners name.
"In the event that the acquisition proceeds, House of Fraser intends to operate the Jenners store in Princes Street alongside House of Fraser’s existing Edinburgh store. A further announcement will be made as and when appropriate."
Both parties refused to answer questions yesterday.
In the Abbotsford pub in Rose Street, where many Jenners’ staff enjoy an after-work drink, opinion was mixed.
One shop worker with more than ten years’ service at the company said: "Our pensions are apparently protected, so that is one less worry. Being part of a bigger company may make things more organised in terms of benefits and so on."
A colleague, with two years’ service, said: "The management have been down a blind alley for ages. No-one knows what will happen, but older staff are obviously worried for their jobs."
A key reason for the acquisition is property in Princes Street. House of Fraser occupies a cramped space at the West End, while Jenners has a listed landmark building near the eastern end. One retailing insider raised the possibility of a "property swap".
He said: "Joint ownership gives them more options. They could temporarily close or restrict the Jenners store for refurbishment, while still trading from the other. And they could start talks with their neighbours on Princes Street now that they have the money for grand schemes."
House of Fraser, one of Britain’s biggest retailers with 48 stores, announces its annual profits today.
Founded in Glasgow in 1849 by Hugh Fraser and James Arthur, it has grown through the acquisition of regional department stores such as Dickens and Jones, Rackhams and Army and Navy.
Richard Perks, a retail analyst at Mintel, said: "The purchase makes sense for House of Fraser. Like Harrods, Jenners makes a lot of its money from tourists, so it would be a mistake to lose the brand name altogether."
The Scottish Retail Consortium would not comment yesterday, but Graham Bell, of the Edinburgh Chamber of Commerce, said: "All the indications are that the Scottish retail sector is very strong and major high-street retailers are holding out well and continuing to grow.
"Jenners, as a family company, has done extremely well with its presence at Loch Lomond and clearly has a very valuable base in its property in Princes Street.
"The brand of Jenners is so strong it will survive extremely well ... the fact House of Fraser is interested is an indication of how the centre of Edinburgh is still a prime retail location."
Donald Anderson, the leader of Edinburgh city council, said: "This sort of smart deal is the way forward. This is good news for Princes Street and the city."
Shock and disbelief from customers
"I’M HORRIFIED," said Mary Kirkwood, 56, a Jenners shopper for more than 30 years, outside the rear entrance to the store in Rose Street yesterday. "But it is hardly surprising, given all the problems that Edinburgh has thrown at them. They’ve been threatening road tolls for the last year, and you can’t park anywhere.
"I just think it will finally bring the shutters down on Edinburgh’s history, and that makes me appalled."
Elizabeth Macmillan, of Bruntsfield, Edinburgh, said: "I cannot believe it, but as long as they’re not closing altogether that’s good. I haven’t shopped in Fraser’s, though. Not for years."
Mike Caldwell, 31, of Portobello, said: "Will it make any difference? Perhaps you might be able to find your way around better. It would be a shame to see it change, though.
"In some ways it says more about Edinburgh than the castle or the Royal Mile."
Other shoppers struggled to believe yesterday’s news. "They’ll not sell Jenners," insisted Jean Inglis, 64, of Corstorphine. "It’s owned by a big family. They work upstairs in the store. They’ll never sell Jenners."
How family retailing goldmine lost its lustre
THE sale of Jenners after more than a century will come as a relief to the Douglas Miller family, whose Princes Street goldmine has become less lucrative in the past decade.
As recently as 1995 - long after the glory days of regional department stores - the business struggled to turn in profits of 5 million.
Expansion, including the very popular and profitable airport shops in Edinburgh and Glasgow, and the store at Loch Lomond, helped to flatter the overall picture.
But the 110-year-old building in Princes Street has been both Jenners’ biggest asset and its worst headache.
Its wood panelling, mirrors and grand hall with balconies create a unique "wow factor", but do not lend themselves to the flexible requirements of modern retailing.
Fierce competition from a resurgent George Street and the arrival of aggressive fashion retailers such as Harvey Nichols saw annual profits reduced to 2.75 million in 2003. The threat of road tolls, which Jenners itself admitted would have slashed another 10 per cent from sales, was the final straw.
Robbie Douglas Miller, one of the current managing directors, will leave once the deal is complete.
Jenners was set up by Charles Jenner and Charles Kennington in 1838, trading as Kennington & Jenner.
It has been under the control of the Douglas Miller family since 1881 and was renamed Jenners in 1924.