More House of Fraser stores could be set to close as talks fail
today Nov 12, 2018
House of Fraser boss Mike Ashley’s wish to keep open as many of the beleaguered department store chain’s branches as possible could come to nothing with reports that a raft of new closures are about to be announced.
The insurmountable problem is that landlords won’t agree to HoF’s rent-free or performance-based rent terms. That’s because they’re already under pressure after the continued rise of online shopping, plus a wave of company failures and CVAs, that have led to an unprecedented number of closures on UK high streets and in malls.
The Sunday Times reported that the closure numbers at HoF could be “significant”. It’s unclear just how signifiant though. HoF, under its previous management’s CVA deal (before its administration filing and subsequent purchase) had planned to close 31 of its 59 locations.
When Sports Direct bought the chain, it said it wanted to keep most stores open and started a round of intensive negotiations to this end. But while the Oxford Street flagship in London was announced as an early beneficiary of the new plan, negotiations around other branches have dragged on unsuccessfully for many months, with some closures already announced.
October’s outright purchase of the Fraser’s building in Glasgow by Sports Direct for £95 million, which is more than it paid for the entire HoF chain, won’t have helped its argument to some landlords that it needed a rent-free deal to keep other branches open.
So where does HoF go from here? The Frasers store in Edinburgh closed its doors for the last time on Sunday and more could be set to follow it soon. The newspaper said that Mike Ashley met with property agents CBRE last week to look at which of the remaining stores should close.
At the moment, only 22 stores have been ‘saved’ which is fewer than the number the previous HoF management had committed to retaining. But despite Ashley having wanted to keep 80% open, it’s not clear whether the current situation means more than the original 31 slated for closure could be shut.
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