Stores to be 'downsized' as part of House of Fraser rescue plan

The future of the struggling retail giant is hanging in the balance after talks over a rescue package between its Chinese owner and lenders reportedly reached a deadlock.

Now it has emerged that Wolverhampton's 131-year-old former Beatties store is said to be among those in line to be downsized as part of plans to reduce HoF's floor space in its 59 UK branches by almost one third.

Industry experts have suggested at least 20 stores are under consideration for closure.

HoF bosses have rejected reports that its rescue deal is on the brink of collapse, insisting that plans for a company voluntary arrangement (CVA) with its lenders and landlords were 'on track'.

However, HoF CEO, Alex Williamson, has fuelled fears that many stores are likely to close in regions where sales growth has slowed.

He said: “If we are to deliver a sustainable, long-term business supported by new liquidity, then we need to make difficult decisions about our underperforming legacy stores.

“I am conscious that inaccurate speculation only feeds the ongoing uncertainty for my colleagues in the business and I reassure them we will share further news when we have it.”

The company has insisted that, while it had hoped to launch the CVA at the beginning of June, the board expected it to be agreed within the next 10 days.

It said C.banner confirmed on June 1 that it would raise £124m through a share sale in Hong Kong, with the backing of its majority shareholder, to support the deal.

Chairman Frank Slevin said: “We are on track with our plans to enter the proposed CVA agreement. The funding from C.banner is another important milestone in this complex process.”

He added: “We continue to have very constructive talks with our banks and other stakeholders who are positive about the plans.”

Reports over the weekend suggested that HoF's landlords had not been supportive of the CVA.

The business needs 75 per cent of creditors to back the plan, and has also been seeking the approval of the Pensions Regulator.

House of Fraser's collapse would endanger 17,000 staff at stores including Beatties, which it took over in 2005, Telford, Shrewsbury and Birmingham.

Bosses said last month that it would reduce the size of the store portfolio, although it is thought that no official hitlist of those earmarked for closure would be drawn up until the CVA is launched.