In the midst of waning consumer confidence, House of Fraser has confirmed plans to close 31 of its 59 branches within the next year – among that number, are their prime location outlet in Oxford Street and headquarters in Baker Street.
After 169 years, the high street retailer is seeking a Company Voluntary Arrangement (CVA) to avoid becoming the latest horror story, in the crisis that has hit UK high street retailers hard in 2018. The CVA could see as many as 6000 staff lose their jobs as branches begin to close at the start of 2019.
This step is seen as necessary and perhaps inevitable in the wake of what was described in their investor presentation as a ‘perfect storm of circumstances’. While some factors such as low consumer confidence can be felt across the board, House of Fraser – along with Marks and Spencer and Toys ‘R’ Us – has suffered greatly at the hands of a diminished footfall, which sparked losses as great as 44 million GBP by the end of 2017.
Regarding the measures proposed by the CVA, Chairman Frank Slevin commented, “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.”
Going forwards, more widespread discussions will be had about the nature of CVAs, as while House of Fraser Limited received the 75% votes of approval to allow the CVA to go ahead, they faced fierce opposition from landlords on their proposal of lower rent on their remaining sites after 2019. Alongside the CVA, Hamleys owner C. Banner International is preparing to invest 70 million GBP, and buy a 51% stake of what remains of the business.
