Department store chain House of Fraser is to close 31 of its 59 shops, affecting 6,000 jobs, as part of a rescue deal. If the plan is approved, 2,000 House of Fraser jobs will go, along with 4,000 brand and concession roles. The stores scheduled for closure, which include its flagship London Oxford Street store, will stay open until early 2019, House of Fraser said.
The retailer needs the approval of 75% of its creditors to go ahead. Creditors will vote on the insolvency plan, which involves company voluntary arrangements (CVAs), on 22 June, In May, House of Fraser’s Chinese owners Nanjing Cenbest reached a conditional agreement to sell a 51% stake to the Chinese owner of Hamley’s, C.banner. The sale is conditional on the restructuring plan being approved.
House of Fraser chairman Frank Slevin said the retail industry was undergoing “fundamental change”, and the company “urgently needs to adapt”. “Our legacy store estate has created an unsustainable cost base which, without restructuring, presents an existential threat to the business.” Closing stores was “a very difficult decision”, he said, but “it is absolutely necessary if we are to continue to trade and be competitive”.
Accountancy firm KPMG, which is overseeing the insolvency process, said the firm had been hit by “mounting pressures facing the UK High Street”. In addition to the store closures, the department store chain is seeking to cut rents by 25% on 10 of the stores it is keeping open. Of the 31 stores it wants to shut, it is seeking a 70% rent reduction for seven months, after which the stores will close.