House of Fraser set to shut half its stores

● Struggling department store chain hopes to strike deal with landlords

House of Fraser is set to unveil plans to close more than half its stores, putting thousands of jobs at risk, as the retailer’s Chinese owner finalises a restructuring proposal.

Sources have suggested that the department store chain could shut 31 of its 59 stores. Four are located in Scotland. Two are situated at either end of Princes Street in Edinburgh, with House of Fraser owning the iconic Jenners department store and a second shop in the West End. Glasgow also has one store, while another outlet is situated at Loch Lomond. House of Fraser last night had yet to announce which outlets would be facing the axe.

The company could also ask for rent reductions on a further 11 outlets as part of the restructuring plan, which is being drawn up with the help of accountancy firm KPMG.

The store closures will be undertaken through a Company Voluntary Agreement (CVA), an insolvency procedure in vogue among struggling retailers.

Landlords, who must vote through the plan, have already expressed serious concerns about the proposals. They met on Tuesday to discuss how to respond to House of Fraser.

Property agency JLL has teamed up with lawyers at Begbies Traynor to unite both institutional and individual landlords and advise on a course of action on House of Fraser’s plans.

However, some landlords have already sold off freeholds and cashed out their investment in an effort to protect themselves from the coming store closures.

House of Fraser, which has about 6,000 employees and 11,500 concession staff, requires the approval of 75 per cent of its creditors for its plan to go ahead.

The retailer’s board is trying to push through its restructuring plan while securing new investment from Hamleys owner C.banner.

C.banner is being lined up to buy a 51 per cent stake in House of Fraser and invest £70 million into what remains of the business.

The firm has raised £124m in new shares to fund the transaction.

House of Fraser remains locked in talks with its lenders and has not confirmed when it will make a final announcement on store closures.

Other retailers undertaking CVAS in a bid to keep trading include New Look, Mothercare and Carpetright. Restaurant businesses have also been seeking to cut their costs with CVAS and store closure programmes, including Carluccio’s, Byron and Prezzo.