House of Fraser plans to shut a number of its department stores across the UK in a bid to cut costs and turn its financial fortunes around.
Without mentioning how many stores are being lined up for closure, the retailer said a ‘reduction’ in its portfolio would be achieved via a company voluntary arrangement launched in June, which will be completed early next year.
Revelations about the proposed closures came as the retailer announced it had been snapped up by the Chinese owner of Hamleys toy group, C.banner.
Closures: House of Fraser plans to shut a number of its department stores across the UK
C.banner has purchased a 51 per cent stake in House of Fraser, which was previously controlled by Chinese group Nanjing Cenbest, which is part of the Sanpower conglomerate.
Cenbest, which is part of the Sanpower Group, will remain a significant minority shareholder. House of Fraser has now changed hands four times in just over three decades.
Frank Slevin, House of Fraser’s chairman, said C.banner’s acquisition was ‘a step to securing House of Fraser’s long-term future.’
He added: ‘C.banner’s investment is a vote of confidence in our prospects.
‘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.
In control: C.banner has purchased a 51 per cent stake in House of Fraser
‘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 has 59 stores across the UK and Ireland and has 6,000 employees and 11,500 concession staff.
In what is proving to be a turbulent year for retailers, a string of other top brands, including Byron, Carpetright and New Look, have all pursued CVA’s in a bid to cut costs and get their finances back on track.
Arrangement: House of Fraser is launching a CVA in June in a bid to get back on track
House of Fraser’s new owner will be desperate not to end up in a similar situation to Toys R Us and Maplin, which collapsed earlier this year.
Back in 2016, high street retailer BHS also collapsed, with around £1billion worth of debts.
House of Fraser’s troubles have been mounting in the last few months, having reported a drop in sales over the crucial Christmas period.
Stricken: House of Fraser reported a drop in sales over the crucial Christmas sales period
In January, House of Fraser reported a 2.9 per cent fall in sales in the six weeks to 23 December compared with a year earlier. Online sales fell by 7.5 per cent over the crucial Christmas period.
After having informal discussions with its landlords to try and reduce its soaring rental costs, the department store chain drafted in KPMG for advice on a proposed restructuring deal.
In April 2014, Mike Ashley’s group, Sports Direct International, snapped up an 11 per cent stake in House of Fraser. Sports Direct refused to give up its stake in the retailer once it was sold to China’s Sanpower conglomerate.