House of Fraser rescue plan still under wraps, leak suggests 31 closures
House of Fraser kept everybody who is following the story of its CVA plans on tenterhooks Wednesday with the expected update not materialising by close of business. The company released the news very late on Wednesday, click here for full details.
But various rumours had emerged and the latest was that it plans to close as many as 31 of its 59 stores. While this will be bad news for landlords, those most concerned are likely to be the thousands of HoF staff with large-scale redundancies set to happen if the stories are true.
Previous rumours concerning the number of locations earmarked for closure suggested it would be less than half of HoF’s total store count, with nobody having thought it would be more than that.
Sources told the Press Association that as well as the sites scheduled to close, the company would also be seeking rent reductions at another 11 of the remaining 28 stores.
The proposed CVA, the idea of which has already met considerable opposition from landlords, will only go through if at least 75% of landlords are on board with it. Reports also said that they had met on Tuesday to discuss their approach with both institutional and individual landlords said to be conferring on a unified strategy.
Some landlords are believed to have acted in advance of any House of Fraser details becoming known and have sold off the freehold of certain properties as they sought to protect themselves from store closures ahead.
So in a year that has seen numerous CVAs and chain closures, why is the House of Fraser plan the one that's meeting the most opposition? HoF may not be on the list of companies planning to close the largest number of stores, but the fact that its locations are very big is a major problem for those in the property sector.
There are concerns that landlords are having to suffer for poor management decisions and also a belief that new HoF financing would mean the company will have plenty of money to pay its rent bills.
Sources have also suggested that most of the closures would be high street stores rather than those located in shopping mall and such closures would leave massive gaps in town centres that are already under pressure. UK high streets have seen large numbers of stores shutting up shop in the past couple of years and the larger the empty store, the harder it is to find new tenants.
Full details of the House of Fraser plan are expected on Thursday from current majority owner Sanpower.
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