Doubt cast over future of Beatties as owners House of Fraser call in advisors

Owner House of Fraser has called in advisors to look at the future of its chain of 56 UK stores.

KPMG is to help draw up a restructuring plan for the department stores business which could involve some closures and job losses among its 6,000 employees and 11,500 concession staff.

One option may be an insolvency procedure known as a Company Voluntary Agreement, which would involve House of Fraser seeking agreement from landlords to cut rents.

House of Fraser has owned 131-year-old Beatties since 2005.

The landmark Beatties in Wolverhampton city centre was opened in 1887 by James Beattie and became the cornerstone of a 12-strong department store empire.

At its height in the 1980s and 1990s, the Wolverhampton store alone employed more than 800 people.

What has led to the uncertainty?

Embattled department store chain House of Fraser has appointed KPMG to advise on a restructuring plan.

The retailer, which is owned by Chinese conglomerate Sanpower, has drafted in advisers to look at a range of options, one of which could be an insolvency procedure known as a Company Voluntary Agreement.

Several retailers have pursued CVAs to save on costs this year., including Carpetright and New Look.

The procedure would involve House of Fraser seeking agreement from landlords to cut rents and possibly shutting some of its 56 UK stores.

House of Fraser has 6,000 employees and 11,500 concession staff at its UK sites, which also include Beatties in Solihull, Rackhams in Shrewsbury and stores in Birmingham and Telford.

But the chain has not yet decided what form of restructuring it will opt for.

The company is due to detail its turnaround plan in the coming weeks.

House of Fraser’s troubles came to the fore in January after it suffered a drop in sales over Christmas.

The business has already started talking to landlords to reduce the size of its stores.

Retailers hit by squeeze on consumer spending

Toy R Us was one of the most high-profile retail casualties in the first quarter, with electronics retailer Maplin also going into administration on the same day.

Retailers including New Look and Carpetright have opted for CVAs this year, putting hundreds of jobs in doubt.

Restaurant chains have also been hit by a squeeze on consumer spending. Byron, Jamie's Italian and Prezzo have all announced plans to shut stores as part of restructuring plans.

Mothercare, Debenhams and Homebase are also under intense pressure.

High street retailers have been battling against a combination of rising costs, fall in consumer confidence and online competition.

Sanpower bought House of Fraser in 2014, but the deal has since proved ill-fated, with UK trading under pressure and little success in its plans to launch department stores worldwide.

House of Fraser reported a 2.9 per cent fall in sales in the crucial six weeks to December 23, while online sales fell 7.5 per cent after hiccups with the launch of a new web platform.

The group had planned to expand the chain internationally, with 50 House of Frasers planned across China under the name Oriental Fraser.

But it has only opened one House of Fraser in China - a store in Nanjing in late 2016.