House of Fraser survival plan means Oxford St to close, 6,000 jobs to go
House of Fraser has revealed details of its CVA and the worst fears of its staff and landlords have been realised as it has confirmed that it wants to close 31 stores, including its longstanding flagship on London's Oxford Street. That will mean the loss of up to 6,000 jobs, including 2,000 directly-employed staff and another 4,000 who work for brands and concession partners.
The company is closing more than half of its 59 total stores in a radical downsizing designed to ensure its survival. In announcing the details, the retailer said that the moves are “central to the significant restructuring of the business, without which House of Fraser does not have a viable future”.
The CVA follows news early last month that a controlling stake in the business (51%) is being sold to China’s C.Banner, with the new owners set to inject significant new capital into the company on condition of it being restructured.
The 59 stores HoF currently operates are all held on leases rather than being owned outright and the company said the portfolio “is unsustainable in its current form.”
As well as reducing in size to 28 stores, instantly sending it down the rankings in terms of the dominant UK department store chains, it’s also proposing to move its London and Glasgow head offices to new locations.
In full, the stores set to close are Altrincham, Aylesbury, Birkenhead, Birmingham, Bournemouth, Camberley, Cardiff, Carlisle, Chichester, Cirencester, Cwmbran, Darlington, Doncaster, Edinburgh Frasers, Epsom, Grimsby, High Wycombe, Hull, Leamington Spa, Lincoln, London Oxford Street, London King Willam Street, Middlesbrough, Milton Keynes, Plymouth, Shrewsbury, Skipton, Swindon, Telford, Wolverhampton, and Worcester.
Two of its stores that are separate legal entities are excluded from the CVA proposals. They are Dundrum in the Republic of Ireland and Beatties in Solihull.
So what happens now? There will be a 17-day consultation period around the CVA proposal and House of Fraser will be going to its creditors on June 22 to seek approval of its plans.
The affected locations will continue to trade as normal for now with closures expected early next year.
Chairman Frank Slevin was brutal in his summing up of the situation: “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. Closing stores is a very difficult decision [but] there should be no doubt that it is absolutely necessary if we are to continue to trade and be competitive.”
He also said that dialogue with key stakeholders has been “constructive” so far. But he appeared to concede that there will be opposition to the CVA plan when he said that “ultimately, it will be for individual creditors to decide how they will vote on the CVA. We believe the proposal has sought to find a solution that is fair for all parties, enabling us to secure vital new capital from C.Banner.”
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