More store closures ahead as House of Fraser warns of restructure following acquisition
PUBLISHED: 14:49 02 May 2018 | UPDATED: 19:18 02 May 2018
ARCHANT NORFOLK PHOTOGRAPHIC Â© 2005
House of Fraser has warned there could be store closures in the future after a majority stake was sold to the owner of toy store Hamleys.
Alongside the news that a controlling interest in the department store chain had been acquired by C.banner International from Nanjing Cenbest, the company revealed a restructure was imminent which will include a “reduction of the store portfolio”.
This will be achieved through a company voluntary arrangement (CVA), a process whereby a firm can cut loss-making stores and reduce rents.
House of Fraser, which has a flagship store in Norwich’s Intu Chapelfield shopping centre, said the deal would provide vital capital to accelerate its transformation plans and it intended to launch the CVA proposal in early June with closures expected in 2019.
Frank Slevin, chairman of House of Fraser, said while the firm had made “substantial progress” on its transformation there was a need to go further as it confronted a seismic shift in the retail industry.
He said: “There is a need to create a leaner business that better serves the rapidly changing behaviours of a customer base which increasingly shops channel agnostically. House of Fraser’s future will depend on creating the right portfolio of stores that are the right size and in the right location.”
He added: “We know that if we are to deliver a sustainable, long-term business then we need to make difficult decisions about our under-performing legacy stores.
“I am all too aware that this creates uncertainty for my colleagues in the business and so we will be transparent with them throughout the process.”
House of Fraser’s troubles came to the fore in January after it suffered a drop in sales over Christmas and started talking to landlords about reducing the size of its property portfolio.
KPMG has been drafted it to advise House of Fraser on its restructuring proposal, with the terms of the plan likely to be finalised at the beginning of June.
House of Fraser is a subsidiary of Sanpower, a Chinese conglomerate chaired by Yuan Yafei.
Mr Yuan has voiced his commitment to House of Fraser, which has 6,000 employees and 11,500 concession staff, and has been pumping millions of pounds into the retailer to keep it on an even keel.
CVAs have been popular in recent months with retailers such as New Look and Carpetright and restaurants including Prezzo, Jamie’s Italian and Byron all using them amid a challenging time for the high street.
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