Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1713
    +0.0019 (+0.17%)
     
  • GBP/USD

    1.2624
    +0.0002 (+0.02%)
     
  • Bitcoin GBP

    55,351.10
    -638.23 (-1.14%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

House of Fraser appoints advisers as it weighs potential store closures

Shoppers outside a House of Fraser department store.  - PA
Shoppers outside a House of Fraser department store. - PA

Embattled department store chain House of Fraser could be lining up store closures after hiring advisers to speed up its restructuring drive.

The group has recruited accountancy giant KPMG as it looks to drive down costs and shore up its financial performance amid the bitter conditions on British high streets.

House of Fraser has been talking to landlords since the start of the year in a bid to curb its rent bill, with Rothschild overseeing a refinancing of its £390m debt package.  

However, the retailer is now weighing up whether to launch a company voluntary arrangement (CVA) in a bid to hasten its turnaround. It is understood that such a process is being considered among a range of restructuring options. A CVA is a type of insolvency procedure aimed at protecting a business from going bust by reducing its costs.

ADVERTISEMENT

Such a move would allow House of Fraser to close loss-making stores and negotiate deep discounts on rent, and would see it join the spate of high street retailers pursuing CVAs to improve their dismal fortunes.

Sky News first reported that the company was considering a CVA.

Fashion chain New Look plans to shut 60 stores and has put 980 jobs at risk after agreeing a CVA in March, while Carpetright is also hoping to use the restructuring process to close 81 shops amid waning consumer confidence.

All the major high street brands that have collapsed since the recession
All the major high street brands that have collapsed since the recession

Retailers have faced a cocktail of pressures, including soaring inflation, rising wage costs and other higher costs sparked by last year’s business rates revaluation.

A potential CVA for House of Fraser could lead to a hefty drop in its 59-strong UK store estate, which employs 12,500 people including concession partners.  

House of Fraser's UK management team has been attempting to cut its property costs by 30pc since the start of the year through informal talks with landlords.

Meanwhile, its Chinese owner Sanpower, which bought the 169-year-old British retailer in 2014 for £450m, has been ploughing millions of pounds into the retailer in recent months to help shift the group onto firmer financial ground.

Moody’s compounded the group’s woes in December when its credit rating was downgraded to Caa1 from B3 in response to poor trading in the first three quarters of last year.

A House of Fraser spokeswoman said: “We are working with KPMG to look at options that best support our transformation programme.”