Business

Troubled House of Fraser to ask landlords for rent reductions

It remains unclear if House of Fraser at Belfast's Victoria Square is among those stores requesting a rent reduction from their landlords. Picture: Seamus Loughran
It remains unclear if House of Fraser at Belfast's Victoria Square is among those stores requesting a rent reduction from their landlords. Picture: Seamus Loughran It remains unclear if House of Fraser at Belfast's Victoria Square is among those stores requesting a rent reduction from their landlords. Picture: Seamus Loughran

FEARS are mounting for the financial health of department store House of Fraser after the retailer confirmed it is seeking a reduction in some of its rents.

The company, which has 59 locations across the UK and Ireland including stores in Belfast and Dublin, said it has contacted some landlords asking for "their support", ahead of the publication of its Christmas trading performance.

But a source stressed the chain was not planning to close any of its branches, but instead reduce the size of its stores by around a third over 10 years by getting rid of top floors or basements.

House of Fraser, which was bought by Chinese conglomerate Sanpower Group for £480 million in 2014, said in a statement: "We can confirm that we have contacted some of our landlords asking for their support as we drive forward with our transformation programme."

It is unclear at this stage if the landlords being contacted include those in Belfast or Dublin.

This year marks the 10th anniversary of House of Fraser's arrival in Belfast, its first operation in Ireland.

The £30m Belfast store has 150,000 sq ft of selling space, and HoF is the anchor tenant within the 800,000 sq ft Victoria Square complex, which opened in March 2008, increasing the city's shopping centre space by a third.

Retail analysts insist news of House of Fraser's financial troubles is another example of a retailer that has "failed to adapt" to changes sweeping through the industry and continues to operate with business models that are no longer fit for purpose in a digitally-driven world.

In September, House of Fraser said half-year earnings sunk to an £8.6 million loss, down from a £900,000 profit in 2016, as website sales suffered from the roll-out of a £25 million online sales platform. Gross profits also slipped 5 per cent to £196.9 million over the period.

In a trading update brought forward from next week, the retailer said UK like-for-like sales tumbled 2.6 per cent in the 17 weeks to December 30, with overall group sales down 1.8 per cent.

The retailer, which has a history stretching back almost 170 years, made the warning after it slashed prices to boost flagging sales over the festive period amid "competitive and volatile" trading.

House of Fraser began with a single drapery shop opened in Glasgow by Hugh Fraser and James Arthur in 1849.

It grew steadily, becoming House of Fraser in 1941, then took hold as a national chain after the Second World War.

Over the years, the business has acquired numerous companies, including Harrods, which is now owned privately.

House of Fraser has been owned by Egyptian-born billionaire Mohamed Al-Fayed and before that by the Fraser family, from which it takes its name.

Across its 59 UK and Ireland locations, it currently employs around 5,000 people directly and 12,500 concession staff.