House of Fraser plots expansion into Russia

House of Fraser currently has 60 sites in the UK and Ireland. Picture: Justin Spittle

House of Fraser currently has 60 sites in the UK and Ireland. Picture: Justin Spittle

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House of Fraser is to expand into Russia under plans revealed by the Chinese tycoon behind the department store’s recent takeover.

Yuan Yafei, chairman of Sanpower, said he would open four franchise stores in Russia and two in Abu Dhabi over the next two to three years, as well as a flagship “Oriental Fraser” store in Nanjing, where the conglomerate is based, next year.

It has already emerged that the 165-year-old business, which began in Scotland, could nearly double its number of sites by opening up to 50 branches in China over the next few years following the takeover deal, which valued the business at £480 million.

The latest plans have shed further light on Sanpower’s global ambitions outside its home country, after it said it wanted to exploit what it called the “iconic heritage brand” with a programme of international expansion. House of Fraser currently has 60 sites in the UK and Ireland, including Jenners department store in Edinburgh. It already has one franchise store in Abu Dhabi, opened last year.

Mr Yuan said that he planned to inject money into its UK operations to renovate its stores but intended to leave its management team in place, adding: “They are very professional; I trust them and they trust me.”

He said the takeover deal, under which his company – already the owner of a department store business in China – is buying 89 per cent of the chain, would help Sanpower tackle the challenges of ecommerce and increasingly complex global supply chains.

Mr Yuan said: “It has the type of department store management system that the Chinese department stores right now lack, especially its buyer system, house brands and also European supply chains. That’s exactly what the Chinese are looking for, greatly lack, and are eager to learn.”

He said he believed China had too many shopping malls, and that he planned to take advantage of their failure over the next few years.

“We are buying House of Fraser right now because of our preparation for three years… when these complexes go out of business,” he said. “Then it is our time, our turn to go in there and buy them, but we need to operate them in a totally new, different business model.” The tycoon expressed bafflement over the behaviour of Sports Direct founder Mike Ashley, who apparently tried to muscle in on the takeover deal when he bought a chunk of House of Fraser from entrepreneur Sir Tom Hunter.

Mr Yuan said: “I don’t understand why he bought 11 per cent of the shares. But I believe we will eventually solve this problem.”

The Sanpower empire spreads across finance, property, media, transport and IT and employs 30,000 people, with assets worth nearly £5 billion. House of Fraser has said it does not expect to see any day-to-day changes for its 7,300 staff and 12,000 concession employees as a result of the takeover. The chain generates sales of £1.2 billion a year.

The department store has its origins as a small drapery store in Glasgow, first listed on the stock market in 1948, and remained a public company until it was bought by Mohamed al-Fayed in 1985.

It was listed again in 1994 before being snapped up in 2006 by a group of investors led by Icelandic tycoon Jon Asgeir Johannesson’s Baugur Group in a £350m deal.

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