House of Fraser may soon be a household name in the Middle East, As part of its expansion programme, the privately owned department store is aiming to tap into the region’s demand for designer clothing, and considering outlets in Cairo, Riyadh, Abu Dhabi, Oman and Qatar.
The retailer 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, reported the Financial Times.
The move is House of Fraser’s first expansion outside the UK and Ireland, where it operates 62 stores, and marks the next step in its growth strategy since being taken private by a consortium led by Baugur in 2006.
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.
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.
Net debt stood at about £180m, down from £198m in January 2009.
Image: HoF Source: FT