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Float could help HoF to innovate

House of Fraser’s return to the stock market could provide the retailer with “much-needed investment” and a greater incentive to innovate, industry insiders have said.

Earlier this week it was reported the department store chain was considering floating on the London Stock Exchange in an effort to simplify its complicated ownership structure.

It would be the third time HoF has been publicly listed, and it is thought the move could value the business at between £200m and £300m.

Brands welcomed the proposal, saying it would usher in a more innovative and competitive culture at the department store chain.

“[HoF] is very slow in reacting, it doesn’t do anything very fast and so this could make it up its game,” said one young fashion brand owner.

Another added: “In the short term the cash will help with brand extension.”

The UK head of one menswear brand told Drapers: “[HoF] is finding it cumbersome with its retail estates but new ownership could be a positive move. It is investing a lot in the online side, which could benefit from a listing too.”

Verdict Retail analyst Honor Westnedge agreed floating would enable the retailer to invest more in its clothing range, attracting exclusive labels or product ranges that would help HoF “differentiate itself in what is a very competitive market”.

She added: “Listing on the stock exchange would provide the [retailer] with the much-needed investment it requires to refresh and modernise its whole store portfolio. It would also provide the power to fuel international expansion; without significant investment this could prove a challenge.”

HoF’s move to relist comes after several months of courting potential buyers, including Sports Direct’s Mike Ashley and the Qatari Investment Authority.

But it has been met with sceptism by some analysts, including Nick Bubb, who noted that “the average cynical City fund manager will be wary of a business which has, apparently, been hawked around all the potential trade buyers without attracting much interest”.

Readers' comments (1)

  • This is a red herring. I don't see the potential investment of floating to be invested in the way that the article suggests. HOF will always do things the same way and any extra cash would just lead to more expensive mistakes being made.

    The hypothetical valuation of £200-300M is quite frankly ridiculous for a business that is poorly run and makes no profit. In HOF's instance, floating is an admission of failure and it cannot be taken any other way. There is no positive spin on this.

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