09 October 2008 | Jake Kanter
Retailer House of Fraser has moved to reassure its suppliers about its financial health.
The department store receives financial backing from Icelandic investment company Baugur. But chairman Don McCarthy said the relationship between the two companies would not impact on the operations of House of Fraser, following difficulties in the Icelandic economy.
In a statement to suppliers, McCarthy said: "Despite speculation, it is important to note that the relationship between Baugur and House of Fraser is solely that of a supportive shareholder. There is no day-to-day trading relationship between House of Fraser and Baugur." He added business would continue as normal and the company is in a position to generate "strong" cash flows.
This week the Icelandic Prime Minister Geir Haarde explained the country's banks and investment institutions had deteriorated "very rapidly". He suggested the entire Icelandic economy could be drawn into a downward spiral, resulting in "national bankruptcy".