House of Fraser blames landlord for Kendals closure

Jessica Middleton-Pugh

After the news this morning that House of Fraser would be closing in Manchester city centre, owner Sports Direct has released a statement saying that its options to save the store were “declined” by the landlord.

Staff at the House of Fraser on Manchester’s Deansgate, still locally referred to as Kendals, were told this morning that the store would be closing in January.

A spokesman for House of Fraser said: “We have suggested various options to the landlord that would have enabled us to save the store in Manchester. Sadly, these have been declined. We are now in consultation with staff about the fact that the store faces closure in the New Year.”

Mike Ashley’s Sports Direct retail group bought the stricken department store business in August for £90m along with its full estate of 59 properties. One of the reasons for administration was cited as a £40m rent bill due before the end of the month.

At the time of the acquisition, the future of 31 locations was in doubt, but the Manchester Deansgate store was not understood to be one of them, despite the fact its £4.3m annual rent bill.

Sports Direct openly said it was going through rent renegotiations with landlords across the country and in September announced which stores were safe and which were set to close. In the case of the closures, Ashley blamed “a small number of greedy landlords” who had failed to agree to Sports Direct’s terms. Again, there was no mention of the Manchester city centre store being at risk.

The grade two-listed Kendals building was last sold in 2007 by Irish investor Sloane Capital for £75m, to a Jersey-based private investor funded by Investec.

After the news broke this morning, Sir Richard Leese, leader of Manchester City Council, said he would be attempting to get the decision reversed.

Leese said: “The Kendals building is a Manchester institution that has been a much-loved constant since it first opened in 1832, dominating its location on Deansgate as our modern city centre developed around it. The current 1930s building is a treasure of our city’s architecture.

“Generations of Manchester people have a huge fondness for the store and the city council will do everything it can to get this decision reversed and support those working at the store who will be shocked at today’s news.”

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Shame Galeries Lafayette didn;t manage to buy HoF in 2014, they had big plans for the Deansgate store, along with Glasgow and Oxford Street as the 3 flagships.

By York Street

I shop in there fairly frequently and the shop floors are almost always like a ghost town, doesn’t surprise me at all. The interior is dated and could do with a refurb. But more to the point, large floor space stores just can’t compete with online in 2018 so change is inevitable. I say gut it out , refurb the lower few floors and bring back as a trimmed down HoF and turn the upper floors into offices.
Or they could to look at El Corte Ingles mode in Spain and get some restaurants up on the top floors with views over Manchester. Plenty of opportunity here, I’m sure it’s not the end!

By Rob H

Obviously the owner doesn’t want to slash the rent. It’s prime real estate in a booming part of Manchester. They have plenty of other options for the building, like a high end hotel, splitting it into a number of units and having mixed use above etc. Plenty of options that probably pay more than what Ashley was offering…

Manchester has lots of department stores. It’s the only place in the country with two Selfridges. So the department store format clearly isn’t finished, yet. But HoF’s days are numbered. I visited this store a couple of weeks ago and it was horribly dated and worn compared to the likes of Selfridges and Harvey Nicks. Ashley would have to spend millions on it to stand a chance, which he won’t. So it’s probably best to just let it die a dignified death and move on.

By Andrew

I have a huge fondness for the building. But as a store it was terrible. Stuff nobody wants to buy at laughably astronomical prices.It was difficult to discern who their target market was.It was no surprise it went to the wall.

By John

Indeed it is a shame Galeries Lafayette didn’t purchase,but the model of Kendals is not beyond redemption, but it has been clear for a long time that HoF didn’t know what it was for. Kendals has a style of pedigree and old school ‘taste and class’ as it’s USP that the much talked of Selfridges and Harvey Nicks hasn’t – you only have to spend some time ( and a little none too distant memory) to see the types of shopper are markedly different. Kendals was ‘old school’ to use a horrible current term, it wasn’t about brand ‘bling’ ( ugh – sorry) and brashness of price, in the way Selfridges and Nicks thrust it down your throat it was about Value and Quality where if you needed to know the price you were in the wrong store. Now alright, I doubt in modern Manchester you have either that demographic any longer or a desire for marketing to follow that line in it’s appeal to lure back customers ( sad really – another symptom of people being scared to associate themselves with something they thing is ‘elite’ and therefore ‘bad’ ). Yet look no further than mid market M&S -despite their annual travails, it’s their food retail that always still performs.Kendals had ( still owns presumably) the old subterranean vaults where their food hall used to be many years ago ( closed off once Waterstones appeared in the old furniture dept over the road in the mid 80’s) could not the woeful menswear dept be extracted from its’ basement annexe’ and allow this space and the vaults to be re opened as food retail or dining? Rob H makes a point regarding the upper floors, yet the top 6th floor was once ( many many years ago) used frequently for dances,( popular again these days if TV ratings are to be believed) why not look at a leisure opportunity for that space instead of having good quality and thus expensive furniture dotted sparsely around using a lot of space, heat and light up, for very few sales- ( I know because I bought a new wing backed Parker Knoll recliner from there a couple of years ago and the place was deserted on a Saturday lunchtime when I went in, and staff almost impossible to find, and rather surprised too that I wanted to actually buy something) This would allow a time envelope outside of normal store hours esp; Friday and Saturday evenings (same for any dining in the vaults) to generate revenue. The ideas and possibilities could go on and on, as I am sure they will in these pages with many imaginative proposals, yet they MUST surely go much further beyond traditional responses of hotel, yet more bloody apartments or ‘office space’.
And finally. …
When I was an Architectural undergrad student in Manchester some *(coughs)* years ago, there used to be a series of framed posters outside the head of Schools office from an ‘Architecture Week’ that had been held sometime in the 70’s, that had focused upon Manchester ( pre Arndale hideousness of course) and which illustrated some of the features of the finest buildings century by century. The 20th Century poster of course contained Kendal Milne’s store dating from 1939. I still recall reading the blurb next to the line drawing explaining that work to complete was delayed as it became obvious that war was brewing again with Germany,( tsk!who’d have thought!) and that the main concrete shell carcass of the building was suitably re enforced – as was each floor from rooftop down, to withstand aerial bombardment. Just a thought, that once again what the Luftwaffe couldn’t destroy in this country, the talent-less post war developers, accountants and estate agents and the bizarre way we continue to structure our economy and society seemingly still can. Toodle Pip.

By Ithuriel

This will be disastrous for Manchester City centre. Kendals is the hub of shopping in the city. There is no other store that provides such a variety of products in one place. It’s been the one constant having seen many other shops open and close over the years. The landlord is obviously incredibly greedy and selfish!

By J Halford

Ashley very cunning and clever to get this played out in the media. Gets the council involved and more than likely will help him get more preferable terms.

By Anon

“We have suggested various options to the landlord that would have enabled us to save the store in Manchester”. Almost certainly this is another of Ashley’s pillaging tactics, with demands for much reduced rents from Landlords to bolster his own P&L and Balance Sheet, all in the name of philanthropy.

How better to succeed than to threaten a local institution?

By Cynical

Supposing you, as an investor buy a building that is contracted to pay £4.3m a year in rent. You take out a mortgage costing say £3m a year.
HoF come to you and say we are only going to pay you £1m a year. But you are still contracted to pay the bank £3m a year.
Doesn’t sound too greedy to reject the offer and look for other options?

By Reality

If Kendals was such a hub of shopping, it wouldn’t be struggling so badly. Best thing about it is the building, but the offer from HoF was increasingly bad – clear apathy from staff in final few years.

Much better uses for this magnificent gem. Some of those shared on here could be exciting (dream scenario would be Selfridges or Harvey Nic’s to take the space but obvious impacticalities).

By Mr Sell Fridge

It’s no great loss. Kendals is the equivalent of driving a British Leyland car when all your mates have moved on to Audis and BMWs. I feel very sorry for the employees but if it is saved it will simply be on a life support machine that sooner or later you have to turn off again. HoF have had every opportunity to modernise it over the years but have elected not to do so.

By Derek

Landlord bashing is simply a tactic to gain some sort of empathy from people who
a.) don’t shop in Kendals
b. ) have no idea about how the property market functions.
can we have a more informed and intelligent discussion on on the future of retail in Manchester, instead of lowest common denominator click bait chit chat

By Ken Dal

Looking at this from a shoppers perspective and not business – Harvey Nichols – high end expensive with a very limited range – store like a ghost town! Sefridges both high end and a few mid range labels again pretty dead place to shop. Both stores supply mostly clothing and no home wares unlike House of Fraser. Where else in Manchester offers all that choice under one roof? Stores on King Street now closed/closing down, Thomas Pink to name one, what will be next? What’s the point in having more hotels/apartments in the city centre when there will be nothing left to attract people there!

By B Carden

Birmingham’s is not closing down.

By Elephant

Dodged a bullet there Manchester. HoF will be turned into a huge discount retailer, it would’ve been worse for the city if it had remained open.

By PDM

B Carden, people aren’t using the apartments and hotels to shop at House of Fraser. You’re clearly trolling.

By PDM

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