British department store House of Fraser have announced plans to close 31 stores across the UK, placing thousands of jobs at risk. Proposals have been filed for Company Voluntary Arrangements ("CVA") of House of Fraser (Stores) Ltd and House of Fraser Ltd which it claimed are central to the significant restructuring of the business.
In May, it was announced that the parent group of House of Fraser would sell a 51% stake to the Chinese owner of Hamleys, C.Banner International, who would inject £70 million into the business.
House of Fraser has 59 department stores with large associated costs. This equates to 4.4 million square feet of retail space with long-term leases, the average remaining lease being 29 years. Following a review of the stores' property portfolio, this will be reduced to 28 stores.
Pending approval of the CVAs, it is anticipated that those stores scheduled for closure will remain open until early in 2019. This development follows losses last year of £44 million.
Sports Direct, who own 11.1% of the shares, have opposed the CVA and have issued proceedings against House of Fraser, claiming that they have been repeatedly denied information which they are legally entitled to, and demands to be provided with a copy of House of Fraser's corporate plan.
Liam Rowley, Head of Strategic Investments at Sports Direct, said: “We have been frozen out by House of Fraser. Their dealings in China are opaque, and it is blatant that we have been unfairly prejudiced. We have no option other than litigation to protect the interests of Sports Direct and its shareholders.”
Creditors will vote on the CVA on 22 June.