Retailer turnaround plan raises questions
Department store group House of Fraser has appointed KPMG to advise on a restructuring strategy, with potential implications for Chester’s long-awaited Northgate scheme, which the retailer is due to anchor.
In a statement, the retailer said: “House of Fraser can confirm that we have appointed KPMG and are working closely with them to look at options that best support our transformation programme.”
HoF, which trades from Altrincham, Carlisle and Manchester in the region, announced a transformation programme last year, which has included an £18m investment in reorganising its distribution network. However, sales in stores and online have been sluggish, with the group reporting trading figures for the crucial Christmas period down 2.9% year-on-year.
Majority shareholder Sanpower has already injected £30m into the group, while reportedly attempts to raise a £40m emergency loan with a lender came to nothing.
A review of store strategy could spell trouble for existing locations, but also Chester, where the retailer signed a deal in early 2017 for a 100,000 sq ft pre-let. In the last six months, Rochdale has seen Marks & Spencer, its key tenant at Rochdale Riverside, announce its intention to pull back from the scheme, a situation that remains at an impasse.
However, agents in the region claim that Chester could in fact be a winner from the process. One told Place North West: “Replacing older stores with massive rents with newer stores on better terms seems to make sense. if they can make it work.”
Cheshire West & Chester Council declined to comment.
In its post-Christmas trading update, HoF said that it had sold a collection of brands it no longer uses in the UK to Guangzhou Sunrise Trading for £30m, dding that the ongoing transformation plan has led to it identifying £26m per year in potential savings, £10m of which had been acted on in 2017. Although it closed two stores last year, the group opened its first new store for nine years, with the emphasis on ‘experience-led shopping’.
The option of a Company Voluntary Arrangement has been speculated upon, a move that would allow HoF to cut underperforming stores and allow it room to negotiate with remaining landlords, while continuing to trade. New Look and Carpetright have gone down the CVA route in recent weeks.
