House of Fraser seeks to cut costs with rent bill reduction
●Landlords asked for support as high street retailers face tough conditions
The company behind one of Scotland’s most iconic department stores is understood to have asked the landlords of some of its outlets for rent reductions, as retailers battle challenging conditions on the high street.
House of Fraser, which owns Jenners in Edinburgh, has confirmed it has contacted the owners of a number of its stores to ask for “support”.
The retailer, which has six stores in Scotland – in Edinburgh, Glasgow, Inverness and Dumbarton – was last month described by ratings agency Moody’s as “a very high credit risk” after it experienced disappointing results in the first three quarters of the financial year.
The company is expected to publish details of how it performed over the Christmas period next week.
It is not known if the request for rent bills to be slashed had been sent to landlords before or after the company’s Boxing Day sale got under way.
A spokeswoman for House of Fraser said: “We can confirm that we have contacted some of our landlords
asking for their support as we drive forward with our transformation project.”
Speculation arose about the state of the company’s finances after the House of Fraser site at the west end of Princes Street in Edinburgh was put up for sale. The premises are on the market with a £13.7 million price tag amid suggestions the site could be transformed into a new flagship hotel.
Earlier this week, retail bellwether Next reported an unexpected boost to festive sales, driven by a strong performance online.
Next, the first high street retailer to publish its festive period trading figures, said online sales had risen by 13.4 per cent over the 54 days from 1 November to Christmas Eve. The chain saw a 10 per cent rise on the same period last year.
However, department store chain Debenhams is consideringclosingsomeoutletsand axing jobs after issuing a profits warning following a poor festive season performance.
Industry eyes will be on House of Fraser’s performance – which has been owned by Chinese company Sanpower since 2014 – as well as the performances of Marks & Spencer and John Lewis.
House of Fraser received a £15m funding boost from its parent company last year, while £10m has also been pledged to the firm in order to build a new distribution centre.
Last month, a lack of investment in the firm’s Edinburgh west end store, combined with the overhaul to St James retail centre, which is due to open in 2020, meant speculation was triggered about a redevelopment of the site.
At the time, a spokeswoman for House of Fraser told The Scotsman that the company had a long-term lease on the Princes Street site, which would not be affected by the potential sale of the building.
Last year, House of Fraser revealed its five-year strategy which featured plans to drop up to 40 womenswear brands as well as invest £25m in an online retail overhaul. The plan also included launching in-store Champagne bars, as well as yoga studios.
Interim results released by House of Fraser in the summer indicated the brand had made an underlying annual loss of £8.6m, compared with a slenthings
“We have contacted some of our landlords asking for their support as we drive forward with our transformation project”