The department store chain is set to close 31 of its 59 stores as part
of a restructuring plan as the company's chief executive says the
changes are "absolutely necessary"
House of Fraser is set to shut 31 stores putting thousands of jobs at risk.
Its
flagship Oxford Street branch is one of those identified to shut, as
well as stores in Birmingham, Cardiff, Middlesbrough, Grimsby and Hull.
The
department store is going to close more than half its stores as the
retailer's Chinese owner finalises a restructuring proposal.
The restructuring plan would leave the group with just 28 stores in the UK.
Chief
Executive Alex Williamson called the announcement one of the most
important in the company's 169-year history and said it was made to
ensure survival of the company.
Chairman Frank Slevin said
whilst closing stores is a "very difficult decision," it is "absolutely
necessary" if they are going to continue to trade.
He said the industry is going through fundamental change and needs to adapt with urgency. House of Fraser also plans to relocate its Baker Street head office and Granite House office in Glasgow to new locations to help cut costs.
The company said it expects stores that are scheduled for closure to remain open until early 2019.
It said it has already informed those whose jobs are impacted by the plans.
See below for full list of stores set to close
Mr Williamson said: "Today's announcement is one of the most important in this company's 169-year history.
"We,
as a management team, have a responsibility to take necessary steps to
ensure House of Fraser's survival, which is why we are making these
proposals.
"We are fully committed to supporting those personally affected by the proposals."
From then until now: History of House of Fraser
House of Fraser has a history going back almost 170 years.
The retailer began with a single drapery shop, opened in Glasgow by Hugh Fraser and James Arthur in 1849.
It grew steadily, becoming House of Fraser in 1941, then took hold as a national chain after the Second World War.
Over the years, the business has acquired numerous companies, including Harrods, which is now privately owned.
House
of Fraser has been owned by Egyptian-born billionaire Mohamed Al-Fayed
and before that by the Fraser family, from which it takes its name.
It was bought by Chinese conglomerate Sanpower Group for £480 million in 2014.
And it has become one of the UK's best known fashion brands.
But the company has struggled over the past few years with competition from online rivals.
Today's announcement means the 59 locations will be reduced to just 28 stores.
The decision to close stores has been made in order to keep up with the industry and be able to continue to trade.
Mr Slevin added: "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."
Before the announcement, Mr Williamson said:
"If we are to deliver a sustainable, long-term business supported by
new liquidity then we need to make difficult decisions about our under
performing 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."
As part of the restructuring plan, which is being drawn up with the
help of accountancy firm KPMG, House of Fraser could also ask for rent
reductions on a further 11 outlets.
Some landlords have already
sold off freeholds and cashed out their investment in a bid to protect
themselves from the upcoming store closures.
Closures will be
undertaken through a Company Voluntary Agreement (CVA), a controversial
insolvency procedure in vogue among struggling retailers.
Approval from creditors is required, who will make their decision on June 22.
From then until now: History of House of Fraser
House of Fraser has a history going back almost 170 years.
The retailer began with a single drapery shop, opened in Glasgow by Hugh Fraser and James Arthur in 1849.
It grew steadily, becoming House of Fraser in 1941, then took hold as a national chain after the Second World War.
Over the years, the business has acquired numerous companies, including Harrods, which is now privately owned.
House
of Fraser has been owned by Egyptian-born billionaire Mohamed Al-Fayed
and before that by the Fraser family, from which it takes its name.
It was bought by Chinese conglomerate Sanpower Group for £480 million in 2014.
And it has become one of the UK's best known fashion brands.
But the company has struggled over the past few years with competition from online rivals.
Today's announcement means the 59 locations will be reduced to just 28 stores.
The decision to close stores has been made in order to keep up with the industry and be able to continue to trade.
If the CVA is approved by landlords, it will affect up to
2,000 House of Fraser staff and a further 4,000 across brands and
concessions.
House of Fraser stressed that the group will
continue to trade "as normal" online and through stores ahead of the CVA
vote and throughout the proposal.
Landlords, who must vote
through the plan, have already expressed serious concerns about the
proposals and met on Tuesday to discuss how to respond.
Property
agency JLL has teamed up with lawyers at Begbies Traynor to unite both
institutional and individual landlords, and advise on a course of action
on House of Fraser's plans.
House of Fraser, which has 6,000
employees and 11,500 concession staff, requires the approval of 75% of
its creditors for plans to go ahead.
The company has a history stretching back almost 170 years and is one of the country's best-known fashion brands.
The retailer's board is trying to push through its restructuring plan while securing new investment from Hamleys owner C.banner.
C.banner is being lined up to buy a 51% stake in House of Fraser and invest £70 million into what remains of the business.
It has raised £124 million in new shares to fund the transaction.
Stores all around the country are going to be affected (file photo) (Image: South Wales Echo)Like other retailers, House of Fraser has struggled over
the past few years as stiff competition from online rivals and the slump
in consumer confidence have knocked the firm.
It forced Sanpower to seek outside help in the form of a stake sale to Hamley's owner C.banner.
Before
today's announcement, the group had 59 locations across the UK and
Ireland, and employed around 5,000 people directly and 12,500 concession
staff.
The stores which will remain open are: Gateshead Metro
Centre, Huddersfield, Leeds, Manchester, Nottingham, Sheffield
Meadowhall, Sutton Coldfield, Bluewater, Croydon, London City, London
Victoria, London Westfield, Richmond, West Thurrock, Lakeside, Bath,
Bristol, Cheltenham, Cirencester, Exeter, Guildford, Maidstone, Norwich,
Reading The Oracle, Rushden Lakes, Edinburgh (Jenners), Glasgow, Loch
Lomond Shores (Jenners), Belfast.
Two further shops are excluded
from the proposals as they are separate legal entities. These are Dublin
Dundrum and Solihull (Beatties).
The company said it expects stores that are scheduled for closure to remain open until early 2019 (file photo) (Image: PA)Will Wright, a restructuring partner at KPMG - which is
handling the CVA, warned that House of Fraser would be at risk of
administration if it does not go ahead.
He said: "The business
has been impacted by the mounting pressures facing the UK high street,
with the declining profitability of certain stores exacerbated by costly
legacy leases which were originally negotiated many years ago.
"With
trading conditions unlikely to materially improve in the short term,
the future of House of Fraser is at significant risk unless steps to
restructure the business both financially and operationally are taken."
A
raft of CVAs have been struck in recent months as retailers struggle
amid surging costs, rising business rates, competition from online
rivals and a slowdown in consumer spending.
Other retailers undertaking CVAs in a bid to keep trading include New Look, Mothercare and Carpetright.
Restaurant
businesses have also been seeking to cut their costs with store closure
programmes, with Carluccio's, Prezzo, Byron and Prezzo all pushing
through CVAs this year.
List of House of Fraser stores set to shut:
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
As part of the restructuring plan, which is being drawn up with the
help of accountancy firm KPMG, House of Fraser could also ask for rent
reductions on a further 11 outlets.
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