House of Fraser has announced plans to shut 31 of its 59 UK and Ireland stores, impacting around 6000 jobs, as it finally unveiled details in its company voluntary arrangement (CVA) proposals.
The CVA proposals were filed with the Court of Session in Edinburgh yesterday and follows last month’s announcement regarding C.banner’s conditional agreement to acquire a 51 per cent stake in House of Fraser and its intention to introduce significant new capital.
House of Fraser said it underwent a comprehensive review of its entire property portfolio and found it was unsustainable in its current form.
The proposed store closures will reduce its estate dramatically to 28 branches.
Stores that have been earmarked for closure include the Oxford Street flagship in London and the Edinburgh Frasers branch. (Full list below).
The CVA also includes proposals to relocate the Baker Street head office and the Granite House office in Glasgow to new locations in order to further reduce costs.
The department store retailer said it has held “constructive initial discussions” with landlords and other key stakeholders.
Should the CVA be approved, it will affect up to 2000 directly-employed House of Fraser colleagues and a further 4000 brand and concession staff members.
The retailer said that those impacted by the proposed changes have already been informed.
The consultation on the CVA proposal will take place over the next 17 days and House of Fraser will seek approval from its creditors on June 22.
The company stressed that all of its stores and online website will remain open and continue to trade as normal until early 2019, pending CVA approval.
“These proposals are central to the significant restructuring of the business, without which House of Fraser does not have a viable future,” the department store said in a statement this morning.
It added: “The directors are committed to working with all those affected openly and with sensitivity over the months ahead.”
Will Wright and Robert Croxen of KPMG have been appointed as nominees to the CVA.
House of Fraser chairman Frank Slevin said the business urgently needed to adapt to the fast-changing retail landscape in order to allow it to thrive.
“Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business,” he said.
“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.
“We have had constructive dialogue with a number of key stakeholders to date, and we will continue this engagement over the next 17 days.
“Ultimately, it will be for individual creditors to decide how they will vote on the CVAs. We believe the proposal has sought to find a solution that is fair for all parties, enabling us to secure vital new capital from C.banner.”
House of Fraser chief executive Alex Williamson said today’s announcement was one of the most important in the retailer’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,” he said.
“I would like to offer my heartfelt thanks to all my colleagues at House of Fraser for working tirelessly throughout this difficult period.
“We are fully committed to supporting those personally affected by the proposals.”
The House of Fraser stores identified for closure under the CVA proposal are:
- Edinburgh Frasers
- High Wycombe
- Leamington Spa
- London Oxford Street
- London King William Street
- Milton Keynes