House of Fraser to shut 31 stores, with 6,000 jobs under threat
The closures – including the Oxford Street store in London – will leave the group with 28 shops across the UK and Ireland.
Up to 6,000 jobs are under threat after embattled department store chain House of Fraser announced 31 of its 59 stores are set to shut across the UK and Ireland as part of a rescue plan.
House of Fraser said the planned closures, which include its Oxford Street store, come as part of a company voluntary arrangement (CVA) – a controversial insolvency procedure in vogue among struggling retailers.
If the CVA is approved by landlords, it will affect up to 2,000 House of Fraser staff and a further 4,000 across brands and concessions.
It said the shops earmarked for closure would remain open until early 2019.
The group said it also plans to relocate its Baker Street head office and the Granite House office in Glasgow to help slash costs and “secure House of Fraser’s future”.
Alex Williamson, chief executive of House of Fraser, said: “Today’s announcement is one of the most important in this company’s 169-year history.
“We, as a management team, have a responsibility to take necessary steps to ensure House of Fraser’s survival, which is why we are making these proposals.
“We are fully committed to supporting those personally affected by the proposals.”
House of Fraser said it has already informed staff set to be impacted by the plans, and was committed to “working with all those affected openly and with sensitivity over the months ahead”.
6,000 job losses at House of Fraser across 31 stores. Another big loss for high streets. Huge retail turbulence continues.— Wes Streeting MP (@wesstreeting) June 7, 2018
As well as the store closures, House of Fraser’s restructuring deal will also see the rents slashed for a further 10 stores that will remain open.
Landlords, who must vote through the plan, have already expressed serious concerns about the proposals and met on Tuesday to discuss how to respond to House of Fraser.
At least 75% of creditor approval is needed, with the vote set to take place on June 22.
Property agency JLL has teamed up with lawyers at Begbies Traynor to unite both institutional and individual landlords, and advise on a course of action on House of Fraser’s plans.
House of Fraser stressed that the group will continue to trade “as normal” online and through stores ahead of the CVA vote and throughout the proposal.
Frank Slevin, chairman of House of Fraser, said: “Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business.
“So whilst closing stores is a very difficult decision, especially given the length of relationship House of Fraser has with all its locations, there should be no doubt that it is absolutely necessary if we are to continue to trade and be competitive.”
The future of House of Fraser is at significant risk unless steps to restructure the business both financially and operationally are taken Will Wright
Hamleys owner C.banner is being lined up to buy a 51% stake in House of Fraser and invest £70 million into what remains of the business.
But its cash injection is pledged only on the condition the retailer can agree the CVA restructuring.
Will Wright, a restructuring partner at KPMG – which is handling the CVA, warned that House of Fraser would be at risk of administration if the CVA does no go ahead.
He said: “The business has been impacted by the mounting pressures facing the UK high street, with the declining profitability of certain stores exacerbated by costly legacy leases which were originally negotiated many years ago.
“With trading conditions unlikely to materially improve in the short term, the future of House of Fraser is at significant risk unless steps to restructure the business both financially and operationally are taken.”
A raft of CVAs have been struck in recent months as retailers struggle amid surging costs, rising business rates, competition from online rivals and a slowdown in consumer spending.
Other retailers undertaking CVAs in a bid to keep trading include New Look, Mothercare and Carpetright.
Restaurant businesses have also been seeking to cut their costs with store closure programmes, with Carluccio’s, Byron and Prezzo all pushing through CVAs this year.