ALTHOUGH it finally collapsed in ignominy yesterday, House of Fraser was once one of the greatest names in British retailing. It was a Scottish success story for more than 150 years, yet has been brought low in the space of two decades.
Founded as a drapery shop called Arthur and Fraser in Glasgow in 1849, the company was content to grow slowly, adding a wholesale operation in central Glasgow.
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Eventually the co-founders Hugh Fraser and James Arthur went their separate ways, with the former keeping the retail side of the company. It was this business which later became Fraser and Sons, which specialised in department stores.
As well as acquiring other businesses in Scotland, a store was opened in London in 1879. Fraser’s son, also called Hugh, presided over more expansion and the introduction of the famous stag’s head motif.
The first Hugh Fraser’s grandson, Hugh Fraser III, was the man who really made the transformation of the company possible.
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Having overseen the purchase of Glasgow stores such as Arnotts and Simpsons, he amalgamated them into a single new and very profitable business. Then Fraser had the brilliant idea of selling the actual store properties to insurance companies as an investment and leasing them back at good rental rates.
This freed up money for investment and House of Fraser, as it was called before it listed on the Stock Exchange in 1948, bought rivals such as Binns in 1953 and Harrods in 1959 – one wonders if Mike Ashley knew that connection when he boasted yesterday of making House of Fraser “the Harrods of the High Street”.
Hugh Fraser III was knighted for his contribution to British retailing, and his son, the fourth and last Hugh Fraser to take charge of the company, became the second Baron Fraser of Allander. He was flamboyant and cavalier, once racing the late Clement Freud in a “match” horse race in front of millions of television viewers.
Fraser loved a deal and liked nothing more than to cock a snook at the big English retailers by expanding the House of Fraser ranges of goods and making their High Street stores a by-word for elegance.
Fraser was also an inveterate gambler who lost millions in casinos, and was ousted as chairman during a stormy board meeting in 1981 after Roland “Tiny” Rowland, head of the British industrial conglomerate Lonrho, made a takeover bid for Fraser valued at some $375 million. Fraser left the company never to return and was replaced by Roland Smith. Two years before his death from cancer in 1987, Sir Hugh Fraser had to watch on as House of Fraser was sold to the Egyptian Al-Fayed brothers for £615m.
Smith said at the time: “We are pleased that the Al-Fayed family have secured their majority shareholding in the House of Fraser and look forward to working with them.
“The 25,000 people employed in House of Fraser now deserve a period of quiet so that they may concentrate on making the company an even more important influence in British retailing.”
It was certainly hugely influential because it was quite simply the biggest retail store company in the UK. At that time, House of Fraser’s many businesses included the Army and Navy stores, Rackhams, Binns, Dingles and Dickins and Jones stores. At the time of the takeover, House of Fraser had a turnover of more than £1000m and it was estimated to have made a profit of more than £45m in the final year before the sale.
Mohamed Al-Fayed had only wanted just Harrods, and it was no surprise when he split it from House of Fraser in 1994, three years before his son Dodi was killed in the car crash alongside Princess Diana in Paris.
Without Harrods as its anchor, House of Fraser fell on hard times in the 1990s and early 2000s. Scottish retail entrepreneur Sir Tom Hunter tried to buy the chain but was rebuffed.
The company began to retrench in Scotland in particular, closing branches of Frasers and Arnotts around the country before it bounced back in 2005 by buying the famous Jenner’s department store in Edinburgh.
The following year House of Fraser was sold again, this time for £350m to a conglomerate of business interests calling themselves Highland Group Holdings.
Highland was owned by the Highland Consortium, which consisted of Baugur Group through its wholly-owned subsidiary, BG Holding and its investment partners, Don McCarthy, FL Group, TBH Trading, Kevin Stanford, Bank of Scotland – through its wholly-owned subsidiary, Uberior) and Stefan Cassa
Over the next two years House of Fraser expanded and opened its first store in Northern Ireland, and also established an online operation, though it was criticised as too little, too late. After an abortive attempt by a French company, Galeries Lafayette, to take over the company in 2013, Chinese consortium bought it the following year.
But by now House of Fraser was struggling to deal with the combined problems of huge historical debt and increased competition from online retailers.
Despite a reported attempt to bail out the company and a restructuring plan that was going to involve the closure of numerous stores including Frasers in Edinburgh, the company had to admit defeat and go into administration yesterday morning.
It still has 59 stores across the UK, of which the most profitable is said to be its flagship store in Glasgow where it all began some 169 years ago as a simple draper’s shop before House of Fraser became a true giant.
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