House of Fraser to close 31 stores through CVA plans
The House of Fraser department store chain has confirmed that it is to seek approval for Company Voluntary Arrangement proposals that will see 31 of its UK stores close with thousands of jobs put at risk.
The move follows the company’s announcement of 2 May in which it said that C.banner had agreed to acquire a 51% stake in House of Fraser Group and introduce significant new capital on condition that the business cut its number of stores.
Operating 59 leased shops across the UK and Ireland, House of Fraser said its property portfolio is unsustainable in its current form. Following a review, the company has now identified 31 stores for closure which will reduce the total store estate to 28 stores.
As part of the CVA process, the company is also looking to relocate its Baker Street head office and the Granite House office in Glasgow to new locations as a means of reducing costs.
In a statement, the company said it has held constructive initial discussions with landlords and other stakeholders. Pending approval of the CVAs, the stores scheduled for closure are expected to remain open until early in 2019.
If plans for the CVAs are approved, it will mean that 2,000 House of Fraser staff and a further 4,000 brand and concession partners will be affected. The company said those impacted by the proposed changes have already been informed.
The consultation on the CVA proposal will take place over the next 17 days and House of Fraser will seek approval from its creditors on 22 June. In the meantime, House of Fraser will continue to trade as normal both through its stores and online.
Will Wright and Robert Croxen of KPMG have been appointed as nominees to the CVAs.
Frank Slevin, chairman of House of Fraser, said: “The retail industry is undergoing fundamental change and House of Fraser urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive.
“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.
“Our immediate focus is on our colleagues with whom we are communicating openly and supporting at this time.”
