Three House of Fraser department stores in Altrincham, Birkenhead and Carlisle which had been earmarked for closure are expected to remain open, after new owner Sports Direct announced it had successfully completed rent negotiations.
In August it was revealed that Mike Ashley’s Sports Direct retail group had bought the stricken department store business, just hours after it was put into administration, in a deal that saw Sports Direct take over the group’s full estate of 59 stores.
One of the reasons for the administration was cited as a £40m rent bill, due before the end of August.
The future of 18 stores were under question unless new rental agreements could be made. However last night Ashley announced that negotiations over rent terms had been successfully completed at 15 locations, including Altrincham, Birkenhead and Carlisle.
C.banner, owner of Hamleys, had been lined up to take over the business with a £50m-plus cash injection, a deal that had been predicated on a Company Voluntary Arrangement being agreed for a major store closure programme.
The CVA, which as well as 31 store closures included rent reductions at 10 further locations, was agreed in June, but was subsequently challenged by a cohort of landlords – although this challenge was soon settled by HoF, the dispute was cited by C.banner as a reason for backing away, with the group cancelling a share placing that might have funded the deal.
Over the weekend, Ashley said there would still be three closures nationally where “a small number of greedy landlords” had failed to agree to Sports Direct’s terms.
However, Melanie Leech, chief executive of the British Property Federation, which represents the development sector, has spoken out against Ashley’s comments.
She said: “What has been taking place is negotiations between House of Fraser and its landlords – a two-party process – where each party will have its own interests and one party simply can’t cry ‘unfair’ in the media when it doesn’t get what it wants.
“There will be a range of factors to consider on a store-by-store basis but what property owners won’t be doing is simply leaving stores empty for the sake of it, that would be in no one’s interests.”
For the year ended 28 January 2017, the House of Fraser group had gross assets of £946.3m and made £14.7m net profit.