House of Fraser, the British department store group, has confirmed that it will close 31 of its 59 department stores, making up to 6,000 employees redundant. The announcement was made after the company’s creditors agreed to support the plans for restructuring. The earmarked stores will stay open until early 2019. 2,000 of the affected staff are directly employed by House of Fraser in stores across the UK, at its headquarters and distribution centre, while 4,000 are employed in its stores in concession roles.
Commenting on the closures, House of Fraser’s chief executive said: "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."
A representative of the shop workers’ union Usdaw, which is not recognised by House of Fraser, said he had urged the company to engage in talks, “so that we can challenge the business case, investigate what can be done to save jobs and represent our members’ best interests”.
House of Fraser was established in Glasgow in 1849 and is one of the UK’s largest chains of traditional department stores.
The company has been using company voluntary arrangements (CVAs), a form of insolvency proceedings that enables a business to renegotiate agreements with landlords who own the buildings where the stores are located, in order to save struggling businesses. On 20th of July 2018, House of Fraser’s CVA was challenged in court by a group of landlords who claim to have been disproportionately affected during this CVA process. The legal challenge may affect House of Fraser's plans for restructuring.
Since only a third of the affected staff is directly employed by House of Fraser, the rest being employed by concessions, the minimum number of job loss has been set at 2,000 employees.
House of Fraser entered administration on 10th of August, 2018, but on the same day it was acquired by the owner of Sports Direct, the UK-based sports goods retailer. The new owner announced that he wanted to close 12 House of Fraser department stores instead of 31, a number proposed by the previous management. The new owner has up to one year to reach a decision about the closures and job reductions.
Unite the Union, Britain's biggest trade union, issued a warning that the low pay and poor working conditions at Sports Direct should not be transferred to the House of Fraser.