House of Fraser hits back at CVA rumours, newspapers say flagship could close

By

Sandra Halliday

Published
Jun 4, 2018

House of Fraser issued an unexpected statement at the weekend as rumours continued to swirl around its CVA plans and there were reports that its flagship Oxford Street, London, store could close.

The statement came following what it said was "inaccurate and unhelpful media speculation” and saw it reiterating its CVA plan. 

“The CVA is a condition of a transaction which will see international retailer C.banner acquire 51% of House of Fraser from current parent company, Cenbest,” it said. “It continues to be the case that this transaction will see the injection of significant fresh liquidity into the business. House of Fraser is in close dialogue with its lending banks who are supportive of the company’s plans and the transaction with C.banner is progressing as expected.”

It insisted that funding for the purchase of the 51% stake is on track and that the company has had “very constructive talks" with banks and other stakeholders "who are positive about the plans.”

On the store closure issue, CEO Alex Williamson also said: “If we are to deliver a sustainable, long-term business supported by new liquidity then we need to make difficult decisions about our underperforming legacy stores. I am conscious that inaccurate speculation only feeds the ongoing uncertainty for my colleagues in the business and I reassure them we will share further news when we have it.”

The statement came after reports that landlords of its UK stores are unhappy about the CVA plans with big names such as Legal & General and Westfield said to be planning to oppose it. 

And The Guardian newspaper also said that the chain’s future was “hanging in the balance” over lack of agreement between the prospective new owner and lenders. Meanwhile the Sunday Times said the overall company's future is in doubt over “a stand-off between its lenders and its Chinese owner.” The suggestion was that it could fall into administration if the CVA isn’t approved.

The Sunday Times also said that the Oxford Street flagship was at risk and could close if the CVA is approved. That branch is believed to be one of up to 30 stores that are on the closure list out of the company’s 59 total locations. In 2006, the company also closed its higher-end Dickins & Jones department store around the corner on Regent Street after its rent bill became unaffordable.

If the House of Fraser flagship were to close, it would leave nearby Debenhams and John Lewis in a much stronger position as the two key middle-market department stores in the area. But it would also leave a very large gap on London's premier shopping street. While Oxford Street’s status means letting the space would probably not be difficult, it would be unlikely to be let in one unit with a variety of global chains the most likely new tenants.