House of Fraser is seeking to slash its rent bill, sparking fears it could be the next high street retailer to suffer financial woe.
The struggling department store chain has written to landlords asking for its rents to be cut, as it prepares to reveal its results for the all-important Christmas trading period next week.
It comes just 24 hours after rival Debenhams saw nearly £70million wiped off its value after issuing a shock profit warning following dismal Christmas sales.
House of Fraser’s plea to landlords has sparked concern for the overall health of the business. And it echoes action taken by BHS shortly before it went bust in 2016 when it desperately sought to reduce its rent bill to cut costs.
The struggling department store chain has written to landlords asking for its rents to be cut, as it prepares to reveal its results for the all-important Christmas trading period (file photo)
House of Fraser’s plea to landlords has sparked concern for the overall health of the business. And it echoes action taken by BHS shortly before it went bust in 2016 when it desperately sought to reduce its rent bill to cut costs.
House of Fraser is Britain’s third-largest group of traditional department stores with 61 branches, 58 of which are in the UK. It employs 17,000 staff and is privately owned by Sanpower, a Chinese conglomerate run by billionaire Yuan Yafei. Sources say Sanpower made an ‘informal’ request to revise the amount of rent it pays on stores in recent weeks.
It is not known which stores could be affected, but many are in expensive buildings in large town centres.
House of Fraser has been struggling to revive its high street sales as customers opt to shop online. Its sales were further hit by an overhaul of its website in April and May, and it has scrapped a string of underperforming brands which forced it to heavily discount a number of items.
Last year hedge fund tycoon Crispin Odey, who is notoriously gloomy about the fortunes of UK retailers, said of Debenhams: ‘It’s a race between them and House of Fraser as to who will go down first.’
House of Fraser has been struggling to revive its high street sales as customers opt to shop online (file photo)
In December ratings agency Moody’s branded House of Fraser a ‘very high credit risk’. Bosses asked Sanpower for help in the autumn, which resulted in a £25million cash injection to ensure there was enough cash to fulfil orders over the Christmas period.
Over the years House of Fraser has purchased chains such as the Army & Navy Stores, Barkers of Kensington, Beatties, Dickins & Jones, Jenners, Kendals, Rackhams and Binns.
In accounts for the year to January 2017, the company warned of costly store lease agreements and said it had set aside £5.7million to deal with the problem. It reported profits of £22.2million that year, up 70 per cent.
The store is expected to publish the results of its trading over Christmas next week, alongside rivals John Lewis and Marks and Spencer.
House of Fraser said: ‘We have contacted some landlords asking for support as we drive forward with our transformation programme.’