House of Fraser has been given the green light from creditors to axe more than half of its store estate, resulting in up to 6,000 job losses.
The struggling department store chain will close 31 out of its 59 outlets through a Company Voluntary Arrangement (CVA), which will also allow it to secure rent reductions on its remaining shops.
Closures will affect up to 2,000 House of Fraser staff and a further 4,000 across brands and concessions.
House of Fraser secured the backing of more than 75% of creditors, including landlords, for the CVA at a meeting on Friday.
House of Fraser chairman Frank Slevin told the Press Association the vote was “satisfactory”.
He added: “I am now focused on the implementation of the business plan. We will continue to focus on that going forward. Today has given us part of the solution to that.”
Mr Slevin described the store closure plan as a “seminal moment” in House of Fraser’s history.
The CVA was voted through despite anger among landlords, who have complained that they are being forced to stomach a financial hit at the same time as House of Fraser enjoys new investment.
Alongside the CVA, Hamleys owner C.banner is being lined up to buy a 51% stake in the firm and invest £70 million into what remains of the business.
At the meeting, furious landlords berated House of Fraser’s management and their advisers at KPMG over how the CVA was conducted.
They complained that their share of the vote had been structured unfairly in an attempt to push through the restructuring proposal.
Despite their protestations, a representative for two of House of Fraser’s landlords said there had been “no give” from the top team.
Mark Fry of Begbies Traynor and Charlotte Coates of JLL, who are advising landlords, said that it was”disappointing” that the CVA has been agreed without “proper engagement”.
They added that landlords are considering whether to make a legal challenge against the process and are assessing their options.
House of Fraser boss Alex Williamson had warned that the store closures and job losses represented the “last viable” option to save the retailer, with the group at risk of collapse had the CVA been rejected.
Mr Williamson and Mr Slevin were both in attendance at the creditor vote.
House of Fraser said the shops earmarked for closure, including its Oxford Street store, would remain open until early 2019.
The group also plans to relocate its Baker Street head office and the Granite House office in Glasgow to help slash costs and “secure House of Fraser’s future”.
Robert Hayton, of real estate adviser Altus Group, said the CVA will help reduce House of Fraser’s tax liabilities by an average of £14.29 million per year.
A raft of CVAs have been struck in recent months as retailers struggle amid surging costs, rising business rates, competition from online rivals and a slowdown in consumer spending.
Other retailers undertaking CVAs in a bid to keep trading include New Look, Mothercare and Carpetright.
Restaurant businesses have also been seeking to cut their costs with store closure programmes, with Carluccio’s, Byron and Prezzo all pushing through CVAs this year.
Here is the full list of planned store closures:
- Edinburgh Frasers
- High Wycombe
- Leamington Spa
- London Oxford Street
- London King William Street
- Milton Keynes