House of Fraser is reportedly planning to shut down up to 30 of its stores – almost half of its UK portfolio – as part of a company voluntary arrangement (CVA) to be unveiled next month.
While the exact figure of how many of House Fraser’s 59 UK stores would face the axe is not yet finalised, according to sources speaking to The Telegraph, the retailer hopes to win the backing of creditors and landlords to do it as part of the CVA.
CVAs are a form of insolvency that allows retailers to shut loss-making stores, reduce rents and cut costs in a bid to keep the business in operation and avoid administration.
The sweeping overhaul would lead to thousands of job losses among House of Fraser’s workforce of 6000 directly-employed staff and 11,500 concession staff.
The Telegraph also reports that the retailer has drafted in commercial property giant CBRE to negotiate with landlords on reducing rents, despite previous reports from Press Association that House of Fraser was struggling to get approval from landlords for its CVA.
House of Fraser has declined to comment.
The news comes as ownership of the department store undergoes a change.
China’s C.banner International Holdings is buying a 51 per cent stake in House of Fraser, while Nanjing Cenbest – which previously had an 89 per cent stake in the retailer – will hold on to a “significant minority interest”.
However, the deal is dependent on whether the CVA is confirmed in early June.
C.banner, which is reportedly spending £141 million for its transaction, said House of Fraser would become “more stable” after its CVA process is completed.