House of Fraser staff facing anxious wait over closures
HOUSE of Fraser staff in Glasgow are facing an anxious wait to find out if their store will be affected by a raft of closures.
The owner of Hamleys confirmed it is to take majority ownership of the struggling department and will oversee a sweeping store closure programme, which could see hundreds of jobs axed.
C.banner, the Chinese retailer behind Hamleys, said it will buy a 51 per cent stake in House of Fraser from its parent Nanjing Cenbest, with £70 million changing hands in the process.
While the company has pledged investment, the sale is conditional on House of Fraser shutting some stores.
The company has a store in Glasgow’s ‘Style Mile’ on Buchanan Street.
The brand was established in Glasgow in 1849 as Arthur and Fraser.
By 1891, it was known as Fraser & Sons. The company grew steadily during the early 20th century, but after the Second World War, a large number of acquisitions transformed the company into a national chain and now has 59 stores.
The company will put forward a restructuring plan known as a company voluntary arrangement (CVA), which will require the approval of landlords and bondholders.
House of Fraser’s troubles came to the fore in January after it suffered a drop in sales over Christmas and started talking to landlords about reducing the size of its property portfolio.
Frank Slevin, chairman of House of Fraser, said C.banner’s acquisition was “a step to securing House of Fraser’s long-term future”.
“C.banner’s investment is a vote of confidence in our prospects,” he said.
“We know that if we are to deliver a sustainable, longterm business then we need to make difficult decisions about our under-performing legacy stores.
“I am all too aware that this creates uncertainty for my colleagues in the business and so we will be transparent with them throughout the process.”
The British Property Federation (BPF), which represents landlords, hit out at House of Fraser for its proposal, saying that the company had not followed best practice in its approach to the CVA.
Ian Fletcher, director of real estate policy at the BPF, said: “Announcing the CVA via a statement on new investment, whilst helpful to the overall continuation of the business, is highly insensitive when you are asking property investors to absorb large losses.”
KPMG has been drafted in to advise House of Fraser on its restructuring proposal, with the terms of the plan likely to be finalised at the beginning of June.