NEWS

Store closures loom as House of Fraser drafts in advisers

Published on: 20th April 2018

KPMG has been asked by the Chinese-owned company to explore the possibility of a Company Voluntary Arrangement (CVA).

This comes months after it informally asked store landlords to agree to big rent cuts, Sky News has reported.

The news of KPMG’s appointment, which is understood to have been signed off in recent days, will fuel expectations that a substantial number of HoF’s 59 outlets across the UK are facing the axe.

Sources close to the company said it was not certain that HoF and its shareholders would pursue a CVA but conceded that one was a possibility.

On Friday, a source close to HoF, which is controlled by China’s Sanpower Group, insisted that KPMG had been brought in to advise its management on “a range of options”.

Another major accountancy firm, EY, has been called in by HoF’s bank lenders to advise on its exposure to the chain.

In total, HoF is carrying ‎hundreds of millions of pounds of debt, including a £350m bond which is publicly traded.

HoF is due to present details of its full-year trading performance to bondholders in the coming weeks, when it will also come under pressure to set out firmer plans ‎to tackle its rent burden.

Sky News revealed in January that the company had written to landlords to seek rent reductions, while the company is also facing pressure from credit insurers deciding to stop providing cover to some of the chain’s suppliers. HoF’s trading performance has done little to alleviate concerns over its future. Sales fell 2.9% in its stores and 7.5% online during the crucial Christmas trading period, with conditions on the high street deteriorating further since then.

It employs roughly 5,000 people directly, as well as about 12,500 staff who work in concessions in HoF stores.

 

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