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House of Fraser to close 31 stores

RBR Staff Writer Published 08 June 2018

UK-based department store House of Fraser is planning to close 31 stores, which will affect 6,000 jobs.

The stores are more than half of the 59 stores that House of Fraser has at present. The closure is part of a company voluntary arrangement (CVA), which is part of its rescue deal.

The plan will need approval from at least 75% of its credits. Creditors are expected to vote on this proposal on 22 June.

Once approved, 2,000 direct jobs and 4,000 brand and concession roles will be at risk.

The CVA is a legal process in the UK, where landlords are needed to agree to reduced rents or termination of lease.

The stores set for closure include House of Fraser’s London Oxford Street store and they are expected to stay open until early next year.

As per the restructuring process, the company is planning to relocate its Baker Street head office and Granite House office in Glasgow to other locations to help cut costs.

The company also stated that it is in discussions with its creditors, landlords and other stakeholders.

Chinese company C.Banner International stated that it will provide funding for House of Fraser if it shuts down its stores.

In the recent months, the rise of e-commerce has led to drop in the sales for several retailers across the UK. The closure of House of Fraser’s stores is expected to add significantly to the number of vacant stores in the UK shopping streets.

Several retailers including Mothercare, New Look, CarpetRight, Maplin and Toys R Us have either applied for CVA or have closed down.

House of Fraser chairman Frank Slevin said: “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."

He also stated the retail industry is going through fundamental change and the company urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive.

Image: House of Fraser on Briggate in Leeds, West Yorkshire. Mtaylor848/Wikipedia.org