SAVE OUR HIGH STREETS
Loyal customers’ outrage as House of Fraser stores refuse to honour gift vouchers after £90m takeover
UK that used to have branches but no longer do.
The Daily Mail has been campaigning to save the country’s high streets, which are being hit by lower footfall and higher business rates than online retailers. An investigation earlier this year found Lloyds and Royal Bank of Scotland were downplaying how many customers used branches they wanted to shut.
Gary Womersley, head of branch network for Nottingham Building Society, said: ‘Financial institutions play a major role in local high streets drawing customers to shops and boosting sales and business.’
The survey questioned 100 UK shop owners and 1,073 shoppers. Owners hit by bank branch closures estimate that their annual revenue dropped by an average of 20 per cent. It also found that 26 per cent were looking at moving their businesses to a new area or smaller premises nearby, while 31 per cent were considering operating solely online.
‘Are you going to pay for this?’
THOUSANDS of House of Fraser customers have reacted with fury after stores refused to accept the company’s own gift vouchers since a takeover by Sports Direct owner Mike Ashley on Friday.
The billionaire, who paid £90million to save the struggling department chain from closing, has come under fire over the weekend after it was revealed his last-minute deal allowed him to dump any responsibility for the pensions of 10,000 staff.
But the move, which will see them dumped into the Pension Protection Fund lifeboat scheme and lose up to 10 per cent of their retirement income, is set to be scrutinised by the pensions watchdog. A spokesman said last night: ‘Our anti-avoidance powers allow us to take action if we think an organisation has attempted to avoid obligations to a pension scheme.’
And last night, as frustration over House of Fraser’s refusal to honour gift cards and vouchers grew, it was angrily suggested that alienating loyal customers was not the best start for Mr Ashley’s regime.
Signs posted in windows at the department stores had read: ‘Please be advised that we will not be able to process any gift card transactions. Please accept our apologies for any inconvenience this may cause.’
One customer contacted the company from Belfast to say he was ‘disgusted’ that it had rushed to stop accepting gift cards. Another said: ‘It appears you have stopped honouring House of Fraser vouchers? Not a good start to a new venture, destroying customer loyalty.’ Writing on the company’s Twitter feed, a customer said: ‘Great that you have been saved but very upsetting that I now cannot use my £100 gift voucher,’ while another added: ‘I haven’t been able to use my gift card. I have £ 100 on it.’ House of Fraser, which was founded in 1849, has now said that customers will have to post gift cards and vouchers to its head office in London, and replacements will be issued.
However, that failed to satisfy customers who fear they will not be honoured or that posting high-value gift cards – which can each hold up to £250 – meant using expensive recorded delivery to ensure they reach their destination. One customer questioned who was expected to carry the cost of doing this, writing: ‘You can’t just send gift cards through the post. It’s like posting cash. It will have to be sent by special delivery. Are you going to pay for this?’
The future of the 59 House of Fraser stores and their 17,000 staff remains up in the air at the moment. It is not clear whether plans by the previous owners to close 31 stores, many in expensive leased premises across Britain, will go ahead under Mr Ashley, who founded his budget High Street sports chain in 1982.
It has also emerged that a 28-year- old former nightclub promoter will play a key role in deciding the future of House of Fraser. Michael Murray, who is engaged to Mr Ashley’s daughter Anna, is the so-called ‘head of elevation’ at Sports Direct.
A row erupted with Sports Direct shareholders last month when it was revealed Mr Murray has been paid £5million since his appointment in 2015, leading to accusations of nepotism.
City sources said they expect Mr Murray to play a major role in attempts to turn House of Fraser department stores into Mr Ashley’s vision of ‘the Harrods of the High Street’.
However, property analyst Andrew Teacher, managing director of City property firm Blackstock Consulting, questioned his credentials for the role, saying: ‘It’s a bit worrying the future of a 169-year-old institution is in the hands of a 28-year-old without much industry experience.’
Sports Direct has suggested several House of Fraser stores will be transformed into Mr Ashley’s upmarket Flannels designer outlet shops.
It is believed that the decision to require House of Fraser customers to send in gift cards to get a replacement will have the effect of reducing the firm’s liabilities, because not everyone will do so. It is understood that the decision was taken by executives at Sports Direct, rather than House of Fraser.
Sports Direct did not respond to requests for a comment.
LaST ditch efforts are underway to help secure the pensions of thousands of House of Fraser workers.
Trustees are understood to be preparing to open discussions with leading insurance companies to try and prevent their pension scheme from falling into the Pension Pension Protection (PPF) lifeboat.
Well-placed sources are confident it can be kept out of the PPF, where workers face cuts to their pensions of up to 10pc, likely by an insurer buying it out on better terms.
The 10,000-member scheme is understood to have been well run with long-term investments that would be attractive to insurers.
It currently has a £20m surplus, although the cost of a buyout would likely be about £170m.
a pension insurance buyout involves the insurer taking on the promise to pay pension fund members, giving policyholders a guaranteed income stream.
House of Fraser went bust on Friday and was immediately snapped up by billionaire retail tycoon Mike ashley, for £90m.
ashley, who founded Sports Direct in 1982 and has a £2.4bn fortune, said: ‘This is a massive step forward and further enhances our strategy of elevation across the group.
‘We will do our best to keep as many stores open as possible. My ambition is to transform House of Fraser in to the Harrods of the High Street.’
The agreement removes an immediate threat to 17,000 jobs and is expected to result in fewer of House of Fraser’s 59 stores closing.
However, under the controversial arrangement, he is allowed to walk away from the Pension fund, fuelling criticism.
Unsecured creditors including pension funds will be left to share a token £600,000, it was reported this weekend.
Work and pensions committee chair Frank Field MP last week urged ashley to take on the pension liabilities. He called on the tycoon to learn from the BHS debacle, when Sir Philip Green sold the chain for £1 in 2015 and it went bust a year later, leaving 11,000 jobless and a pension deficit of £571m. Green has since agreed to put £363m back into the BHS pension schemes.
Last night the Pension Regulator said it was monitoring the situation at House of Fraser. It has powers to take action if it thinks an individual or company has tried to avoid obligations to a pension scheme. but said it was too early to comment on House of Fraser.
ashley’s future son-in-law Michael Murray, 28, is tipped to play a key role in the future of the business. He is ‘head of elevation’ at ashley’s Sports Direct business.
Dalriada, independent trustees for the House of Fraser pension scheme, could not be reached for comment.
It said last week that as a minimum, members of the pension scheme will receive PPF compenstation levels.
THe pensions of 9,000 BHS employees were secured Yesterday after specialist insurer Pension Insurance Corporation announced a buyout of the firm’s BHS2 scheme, covering £800m liabilities.
Pension Insurance Corporation said the buyout left members of the scheme fully insured and certain to receive benefits. The scheme was set up in 2017 following the cash injection by Sir Philip.