House of Fraser has won approval from its landlords for a company voluntary agreement (CVA) that will see 31 stores close with a loss of about 6,000 jobs. The £1.2bn retailer said the agreement would save it from falling into administration, a move that would have meant the loss of around 17,500 jobs. Now it is set to pursue a new focus on brands as it looks to adapt with its customers.
The CVA was a condition of House of Fraser’s acquisition by C.banner, which also owns Hamleys. That deal was announced in May. The stores that have been identified for closure will trade until early 2019, the retailer said today.
This afternoon, Frank Slevin, chairman of House of Fraser, said: “The approval of the CVAs is a seminal moment in House of Fraser’s history. We must now continue with the implementation of our restructuring plan. This is also an important milestone in the transaction with C.banner and moves us toward the completion of the capital injection first announced in May.”
Alex Williamson, chief executive of House of Fraser, said: “The CVA proposals have been approved by our creditors and we are grateful for their ongoing support and belief in the future of House of Fraser. This was clearly a difficult decision to take but is, ultimately, the only one to secure our future. Our focus is on supporting all of our affected colleagues and we are exploring every opportunity available to them working alongside the Retail Trust and the wider retail community.”
Ahead of the CVA meeting, House of Fraser yesterday set out how it would focus on selling desirable brands within the context of a premium shopping experience, both online and in its stores.
It says it will respond to “evolving consumer preferences” by offering the best choice of contemporary brands and that it invest both in trend-spotting and product innovation using a recent launched global supply chain. It illustrates how consumer preferences are changing by citing Kantar Worldpanel findings that suggest shoppers spent £208m more on branded products over the last year, and less on own-label items.
David Walker-Smith, chief product and trading officer, said: “Since joining House of Fraser, I have worked with the team to review our current product offering and what became crystal clear is our customers love brands. Customers now want more from their shopping experience and as a business, we need to make sure we are exceeding expectations. I’m really looking forward to embarking on this new chapter for the business and working with both our existing and new partners to bring an exciting proposition to stores and online”.
The strategy of focusing on brands appears to be House of Fraser’s answer to the question of how to respond as clothing and department store sales both move online fast. John Lewis has chosen to focus on the customer experience, while Debenhams is looking to social shopping to answer the same questions in response to changing customer behaviour, driven by technology.
The House of Fraser stores that are now set to close are: Altrincham, Aylesbury, Birkenhead, Birmingham, Bournemouth, Camberley, Cardiff, Carlisle, Chichester, Cirencester, Cwmbran, Darlington, Doncaster, Edinburgh Frasers, Epsom, Grimsby, High Wycombe, Hull, Leamington Spa, Lincoln, London Oxford Street, London King William Street, Middlesbrough, Milton Keynes, Plymouth, Shrewsbury, Skipton, Swindon, Telford, Wolverhampton, Worcester.
Image courtesy of House of Fraser