LONDON — High streets up and down Britain are shrinking by the day as heritage retailers grapple with onerous leases, surging costs and the rise of online shopping.
Last month, Marks & Spencer said it plans to close 100 stores by 2022 as it puts an increased focus on online, and now House of Fraser, which will soon have new Chinese owners, is the latest retailer to sound the alarm.
On Thursday, the company said it filed an application for a CVA, or Company Voluntary Agreement, an insolvency process that allows indebted companies to restructure and strike deals with their creditors.
House of Fraser, a department store chain that carries a range of categories from beauty to contemporary fashion, accessories, luggage and homeware, is planning to close 31 of its 59 leased stores across the U.K. and Ireland, including the London Oxford Street flagship store and another unit in the City of London.
Other store closures will be in locations including Birmingham, Cardiff, Edinburgh and Hull. The remaining 28 are mostly located in upscale shopping hubs or malls, such as Westfield London. Some 6,000 layoffs are expected, the company said.
“These proposals are central to the significant restructuring of the business, without which House of Fraser does not have a viable future,” the company said Thursday, adding that its property portfolio is “unsustainable” in its current form.
The CVA is linked to Chinese investor C.banner’s conditional agreement to acquire a 51 percent stake in House of Fraser Group Ltd. and its intention to introduce significant new capital.
As part of this CVA process, the company also proposes to relocate its head office on Baker Street in central London and its Granite House office in Glasgow to new locations. “This will help to reduce costs and secure House of Fraser’s future,” the company said.
HoF said it has held “constructive initial discussions” with landlords and other key stakeholders. Pending approval of the CVA, the stores scheduled for closure will remain open until early next year. The company said it will seek approval from its creditors on June 22. In the interim, it will continue to trade as normal both through its stores and online.
Frank Slevin, chairman of House of Fraser, said with the retail industry undergoing fundamental change, “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. While 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.”