Seven days on from becoming part of Sports Direct, House of Fraser’s website is offline and its outstanding online orders and deliveries have been cancelled.
The retailer was bought out of administration just a week ago by Sports Direct. At the time, Sports Direct gave no details about its plans for the department store. Today the House of Fraser website is down, and the retailer has announced on Twitter that it is cancelling all outstanding online orders, following several days of tweets answering queries about delivery times with the message that some orders had been delayed due to the change in ownership.
Yesterday, the House of Fraser Twitter account said: “Due to delays with delivering online orders, we have taken the decision to cancel and refund all orders that have not already been sent to customers. All customers affected will receive an email in the next couple of days. Please accept our apologies for any inconvenience caused.”
That statement has been met with tweets from disappointed customers asking when they would receive their refunds, what would happen with gift cards, and whether returns that had already been sent back would be reimbursed.
The situation stems from the House of Fraser warehouse, where operator XPO Logistics is understood have stopped processing orders since it has not been paid £30m that it is owed. That’s part of more than £700m that is also understood to be owed to suppliers but that Sports Direct will not have to honour because it bought the retailer out of administration.
InternetRetailing has contacted both XPO Logistics and Sports Direct for their comments and we’ll update this story when we get a response.
Our view: While the House of Fraser debt to suppliers is likely to be unenforceable, not meeting that debt is an approach that seems likely to be met with more problems with suppliers, as already seen through the closure of the House of Fraser website and the cancellation of online orders.
Before its administration, House of Fraser was building a strategy around becoming a home for upmarket brands. Indeed, it aimed to become “the house of brands”, according to a strategy set out as the retailer set out its plans to reduce the number of stores through which it sold.
This is an approach that it has in common with Sports Direct. Last year Sports Direct chief executive Mike Ashley said it aimed to become the “Selfridges of sports” as it aimed to build a next-generation estate of flagship stores. For both retail brands to succeed in these brand-focused aspirations, it seems likely they’ll need to build stronger relationships with the suppliers that they work with – which include brands. These brands are also selling direct to customers in a way that ultimately competes with the department stores on which the Sports Direct model is based.
House of Fraser is a Leading retailer in IRUK Top500 research, while Sports Direct is a Top100 retailer.