The deficit compares with a profit of £1.5m the year before and came as group sales fell 6.3 per cent to £787.8m in 2017.
The figures were released as part of a takeover of the firm by C.Banner, the owner of Hamleys.
“The Brexit referendum and the UK’s resultant decision to leave the European Union and the terrorist attack in London, combined with a rapidly evolving retail market, produced a period of uncertainty and volatility that resulted in a difficult trading environment for the whole retail industry in the UK,” the firm noted.
The Chinese group plans to take a 51 per cent stake in House of Fraser if the chain pushes through a turnaround plan, set to include store closures.
C.Banner pointed out that the annual losses for the House of Fraser group included the start-up and operating costs of House of Fraser China. The store chain has Scottish roots.