The department store is the latest addition to a long list of high street retailers who have settled Company Voluntary Arrangements (CVA) to avoid company collapse. As part of the CVA, the retailers will close “loss-making” stores and accept rent cuts to pay off debts and restore some financial strength.
The high street has become a treacherous work environment, with the streets rife with company closures, low profits and lower public morale. Since the disappointing turnout from the holiday season last year, high street retailers have struggled to gauge consumer interest, with online retailers stealing attention.
The high street retailer recently rejected reports that it was on the brink of “collapse” and insisted the CVA will restore strength and allow it to trade more confidently than before.
Nonetheless, the voluntary arrangement still demands the closure of half its estate, including its landmark store in Oxford Street. A further 28 stores will close in Britain and Ireland, as well as the relocation of both head offices in Baker Street in London and Glasgow. While this move will help save the retailer, it will cost thousands of jobs.
While a CVA seems to be the popular solution for retailers on the brink of collapse, there are softer alternatives. At the Credit Protection Association, our credit management products work with our debt recovery services to improve our members’ financial position, as well as inputting the correct safeguards to keep it in place.
In a shocking sign of the levels of distress on the UK high street, Mr Williamson, who only joined House of Fraser last year, said this morning: “Without this restructuring House of Fraser is not viable going forward . . . Our property portfolio dates back many, many decades and it is extremely inflexible and creates an unsustainable cost base going forward.
“Taking a decision of this nature and the scale and brutality of this decision is hard both as an individual and as part of a senior management team. The decision to close this number of stores is not done lightly. This is really grim.”
Two thousand staff will be made redundant, as will a further 4,000 workers, employed in beauty and clothing concessions at House of Fraser stores. If the CVA is approved at a creditors’ meeting on June 22, the stores will be closed by early next year.
Melanie Leech, the chief executive of the BPF, said: “The CVA process is intended to be part of a comprehensive business recovery plan. Property owners, looking after savers and pensioners’ money, will support businesses who demonstrate this commitment, but must protect those pensioners against unfair action that penalises their interests. Urgent action is required and we are calling on government today to undertake a review so that we can restore the CVA process to its original purpose.”