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House of Fraser to shut Shrewsbury and Telford stores as 31 branches close across UK

By Harry Leather | Telford | Business | Published:

Shrewsbury and Telford's House of Fraser stores face closure after the chain today revealed plans to axe more than half its 59 stores, affecting more than 200 workers in Shropshire.

House of Fraser in Shrewsbury is one of 31 stores shutting nationwide

The drastic plan will also see branches closed in Wolverhampton and Birmingham in a bid to rescue the rest of the struggling business.

It will mean more than 1,100 people losing their jobs across the West Midlands and will affect around 6,000 workers nationwide.

A total of 150 people are employed in Telford, 83 in Shrewsbury, 279 at Beatties in Wolverhampton and 688 in Birmingham.

The affected stores opened later than usual today as staff were informed of the news.

A total of 31 stores are being shut across the country, with the closures expected to start in January next year.

From refurb to closure

The former Rackhams store on Shrewsbury High Street is one of the oldest shops in the town and underwent a major refurbishment less than two years ago.

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The store, in a Tudor black and white building next door to the Unitarian Church, dates back to the Della Porta Department store which traded on the site from 1926.

It was purchased by Hide & Co in 1948 but still traded as Della Porta.

The Shrewsbury shop entertained shoppers when it reopened after its 2016 refurbishment

In 1975 it was bought by House of Fraser, which rebranded it Rackhams, although it again now trades as House of Fraser.

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A new cafe was opened, clothing departments were transformed and the interior was refitted when the shop was refurbished in the autumn of 2016.

The Telford store, in the town's main shopping centre, has also had money pumped into it in recent years.

House of Fraser at Telford Shopping Centre

The shop opened in 2003, and expanded by 3,500 sq ft when hundreds of thousands of pounds were spent on a refurbishment. Fifty new jobs were under the revamp.

Shop general manager Gary Slattery said at the time: "This investment shows our continued faith and commitment to not only the store, but to the shopping centre and the town itself."

Why are the shops closing?

The closures are part of a company voluntary arrangement, or CVA, which House of Fraser has sealed with its debtors and landlords in the last few days.

As well as the store closures, House of Fraser’s restructuring deal will also see the rents slashed for a further 10 stores that will remain open.

Shops opened later on Thursday as staff meetings were held. This sign was at the Shrewsbury store.

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

At least 75 per cent of creditor approval is needed, with the vote set to take place on June 22.

Which House of Fraser stores are shutting?

The House of Fraser stores identified for closure under the CVA proposal 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.

Thirty one stores are closing across the UK. (PA Graphics)

Two stores are excluded from the CVA proposals - Dundrum in the Republic of Ireland and Beatties in Solihull because they are separate legal entities.

Solihull and Sutton Coldfield will be the only House of Fraser stores left in the West Midlands.

As part of the CVA process, House of Fraser also plans to relocate its Baker Street head office and Granite House office in Glasgow to new locations to help cut costs.

House of Fraser said it has already informed those whose jobs are impacted by its plans.

What has the company had to say?

Alex Williamson, chief executive of House of Fraser, said: “Today’s announcement is one of the most important in this company’s 169-year history.

"We, as a management team, have a responsibility to take necessary steps to ensure House of Fraser’s survival, which is why we are making these proposals.

“I would like to offer my heartfelt thanks to all my colleagues at House of Fraser for working tirelessly throughout this difficult period. We are fully commited to supporting those personally affected by the proposals.”

Inside the Shrewsbury House of Fraser, which is based inside a beautiful Tudor building

Chairman Frank Slevin added: "House of Fraser urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive.

"Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business.

"So whilst closing stores is a very difficult decision, especially given the length of relationship House of Fraser has with all its locations, there should be no doubt that it is absolutely necessary if we are to continue to trade and be competitive."

What next?

Hamleys owner 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.

But its cash injection is pledged only on the condition the retailer can agree the CVA restructuring.

Will Wright, a restructuring partner at KPMG – which is handling the CVA, warned that House of Fraser would be at risk of administration if the CVA does no go ahead.

He said: “The business has been impacted by the mounting pressures facing the UK high street, with the declining profitability of certain stores exacerbated by costly legacy leases which were originally negotiated many years ago.

“With trading conditions unlikely to materially improve in the short term, the future of House of Fraser is at significant risk unless steps to restructure the business both financially and operationally are taken.”

A raft of CVAs have been struck in recent months as retailers struggle amid surging costs, rising business rates, competition from online rivals and a slowdown in consumer spending.

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 store closure programmes, with Carluccio’s, Byron and Prezzo all pushing through CVAs this year.

Harry Leather

By Harry Leather
Digital Editor - @hleather_star

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