Further closures at House of Fraser are on the cards as landlords have rejected proposed rent deals from new owner, Mike Ashley’s Sports Direct.
According to The Sunday Times, Ashley met with his property agents CBRE last week to decide which stores would remain open and which would close. The newspaper reports that the number of job losses could be “significant”.
When he acquired House of Fraser out of administration in August, Ashley vowed to keep open as many of its 59 stores as possible. He has since agreed deals on 20 stores including its Oxford Street flagship and last month he paid £95m for the freehold of the Glasgow store, known as Frasers, to ensure its future.
However the city of Manchester received a shock just a week later when it was revealed that the store, formerly known as Kendals, would be closing in the new year. The Kendals store was not one of those on the list for closure drafted by former owner Nanjing Cenbest, which had proposed closing more than half of House of Fraser’s stores as part of a CVA deal. The deal was abandoned however and the business was placed into administration before being bought by Sports Direct in a pre-pack deal.
It is understood that CBRE has been trying to negotiate short-term deals that in some cases are based on the performance of the stores in question or to pay business rates but no rent. At present the stores are being operated under license which means Ashley can give two months’ notice on closures.
While some landlords are said to have rejected the deals outright, others have been open to the idea on the basis that Ashley is not likely to tolerate the running of unprofitable stores.