Embattled department store chain House of Fraser in closing more than half of its stores in a bid to save the company – putting 6,000 jobs at risk.
The retailer has announced plans to shut 31 of its 59 stores across the UK and Ireland as part of a rescue deal. The company was bought by Chinese firm Sanpower for £480million in 2014.
The firm is understood to have agreed a restructuring plan which will see all but its most modern stores, and those in large shopping centres, close.
House of Fraser is closing more than half of its stores in the UK and Ireland, it announced today
House of Fraser said the planned closures, which include its flagship Oxford Street store, come as part of a company voluntary arrangement (CVA) – a controversial insolvency procedure in vogue among struggling retailers.
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.
It said the shops earmarked for closure would remain open until early 2019.
The group said it also plans to relocate its Baker Street head office and the Granite House office in Glasgow to help slash costs and ‘secure House of Fraser’s future’.
The announcement comes as Britain’s high street faces a crisis amid an onslaught from online rivals.
This Is Money reports it is predicted more than 10,000 shops will disappear this year – the most in a decade.
Toys R Us and Maplin have collapsed into administration and Marks & Spencer, Mothercare, Carpetright and New Look are all closing shops. Analysts warned the crisis is likely to continue.
Alex Williamson, chief executive of House of Fraser, 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.’
Frank Slevin, chairman of House of Fraser, said: ‘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.’
House of Fraser has a history stretching back almost 170 years and is one of the country’s best-known fashion brands. The retail giant 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.
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.