LONDON (Reuters) - House of Fraser said it needed to close 31 stores to survive, in a plan likely to result in as many as 6,000 job losses, making the department store group the latest in a long line of retail casualties in Britain.
The closures include the group’s flagship shop on Oxford Street in central London and will leave it with just 28 stores across Britain and Ireland.
“These proposals are central to the significant restructuring of the business, without which House of Fraser does not have a viable future,” the group, whose history stretches back to 1849, said in a statement on Thursday.
Its decline has been rapid, with the 480 million pounds ($645 million) paid in 2014 by Nanjing Cenbest, part of China’s Sanpower Group, for an 89 percent stake, looking like a deal from a bygone era.
The planned closures follow last month’s announcement that another Chinese group, retailer C.banner (1028.HK), had agreed to become the majority owner with a 51 percent stake, with Nanjing Cenbest remaining a minority shareholder.
House of Fraser is not alone in having to shrink.
Many British retailers are shutting shops as they try to survive in the face of competition from online retailers such as Amazon, a squeeze on consumer budgets and a change in Briton’s spending habits away from fashion and towards holidays and entertainment.
Rival department store group Debenhams (DEB.L) downgraded its profit forecast for the second time in months in April, while department store market leader John Lewis has cautioned on its outlook.
Illustrating tough trading conditions, House of Fraser said underlying sales had fallen by 7.4 percent compared to the prior year in the 13 weeks to April 28.
It said it had filed proposals on Wednesday for Company Voluntary Arrangements (CVA) in the UK courts to allow it to proceed with the restructuring.
The CVA route, which allows firms to avoid insolvency or administration, has already been taken this year by fellow UK retail strugglers - fashion chain New Look, floor coverings group Carpetright (CPRC.L) and mother-and-baby goods retailer Mothercare (MTC.L).
A one-time owner of London’s most famous shop Harrods, House of Fraser has in its long history been through store closures before, shutting a number of its Scottish stores in 2003 and its Dickins & Jones shop on London’s Regent Street in 2006, but never on this scale.
House of Fraser said that if the CVA is approved by creditors up to 6,000 jobs could go as it shuts stores in cities including Birmingham, Edinburgh and Cardiff.
Of those jobs, 2,000 are direct employees, while 4,000 work for House of Fraser’s brand and concession partners.
If the CVA is approved by creditors at a June 22 meeting, the stores identified for closure will remain open until early 2019, House of Fraser said.
House of Fraser also has two stores in China and a franchised store in Abu Dhabi.
Reporting by Sarah Young and James Davey; Editing by Keith Weir