Beatties set for closure as House of Fraser wields axe over 31 stores nationwide
Wolverhampton's 141-year-old Beatties store faces closure as owner House of Fraser today reveals plans to axe more than half its 59 stores, affecting around 6,000 workers nationwide.
The drastic plan will also see branches closed in Shrewsbury, Telford and Birmingham in a bid to rescue the rest of the struggling business.
It will mean more than 1,100 people losing their jobs across the West Midlands.
The Beatties store in Wolverhampton employs 279, 150 work at Telford, 83 at Shrewsbury and 688 at the House of Fraser store in Birmingham.
More coverage of Beatties' future:
Some staff learned of the news through Twitter before they even got to work today.
A notice on the front door of the building has been put up to inform shoppers that the Wolverhampton store would open late today.
Store closures are expected to start in January next year.
The news was officially broken to staff this morning, with the opening of most stores delayed until around 10.30am.
A total of 31 stores are being closed.
It will bring to an end a major slice of Wolverhampton's trading history and will leave a massive hole in the city centre.
Why is the store closing?
The closure is part of a company voluntary arrangement, or CVA, which House of Fraser has sealed with its debtors and landlords in the last few days.
That will include the landlords of Beatties site in Wolverhampton, which was sold by House of Fraser in sale and leaseback deal for £47 million in 2006 shortly after the store was taken over by the HoF chain.
The House of Fraser stores identified for closure under the CVA proposal are: Altrincham, Aylesbury, Birkenhead, Birmingham, Bournemouth, Camberley, Cardiff, Carlisle, Chichester, Cirencester, Cwmbran, Darlington, Doncaster, Edinburgh Frasers, Epsom, Grimsby, High Wycombe, Hull, Leamington Spa, Lincoln, London Oxford Street, London King William Street, Middlesbrough, Milton Keynes, Plymouth, Shrewsbury, Skipton, Swindon, Telford, and Worcester.
Two stores are excluded from the CVA proposals - Dundrum in the Republic of Ireland and Beatties in Solihull because they are separate legal entities.
It will leave just two House of Fraser stores in the West Midlands – at Solihull and at Sutton Coldfield.
House of Fraser said it has already informed those whose jobs are impacted by its plans.
The closures are part of a proposed Company Voluntary Arrangement, which will require approval from creditors who will make their decision on June 22.
What has the company had to say?
Frank Slevin, chairman of House of Fraser, said: "The retail industry is undergoing fundamental change and House of Fraser urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive.
"Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business.
"So whilst closing stores is a very difficult decision, especially given the length of relationship House of Fraser has with all its locations, there should be no doubt that it is absolutely necessary if we are to continue to trade and be competitive."
As part of the CVA process, House of Fraser also plans to relocate its Baker Street head office and Granite House office in Glasgow to new locations to help cut costs.
The company said it expects stores that are scheduled for closure to remain open until early 2019.
Mr Slevin added: "We have had constructive dialogue with a number of key stakeholders to date, and we will continue this engagement over the next 17 days. Ultimately, it will be for individual creditors to decide how they will vote on the CVAs. We believe the proposal has sought to find a solution that is fair for all parties, enabling us to secure vital new capital from C.banner.
"Our immediate focus is on our colleagues with whom we are communicating openly and supporting at this time.”
"Alex Williamson, chief executive of House of Fraser, said: “Today’s announcement is one of the most important in this company’s 169-year history. We, as a management team, have a responsibility to take necessary steps to ensure House of Fraser’s survival, which is why we are making these proposals.
“I would like to offer my heartfelt thanks to all my colleagues at House of Fraser for working tirelessly throughout this difficult period. We are fully commited to supporting those personally affected by the proposals.”
As well as the store closures, House of Fraser's restructuring deal will also see the rents slashed for a further 10 stores that will remain open.
Landlords, who must vote through the plan, have already expressed serious concerns about the proposals and met on Tuesday to discuss how to respond to House of Fraser.
At least 75% of creditor approval is needed, with the vote set to take place on June 22.
Property agency JLL has teamed up with lawyers at Begbies Traynor to unite both institutional and individual landlords, and advise on a course of action on House of Fraser's plans.
House of Fraser stressed that the group will continue to trade "as normal" online and through stores ahead of the CVA vote and throughout the proposal.
Frank Slevin, chairman of House of Fraser, said: "Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business.
"So whilst closing stores is a very difficult decision, especially given the length of relationship House of Fraser has with all its locations, there should be no doubt that it is absolutely necessary if we are to continue to trade and be competitive."
Hamleys owner C.banner is being lined up to buy a 51% stake in House of Fraser and invest £70 million into what remains of the business.
But its cash injection is pledged only on the condition the retailer can agree the CVA restructuring.
WATCH: Business editor Simon Penfold gives his view on Beatties' downfall
Will Wright, a restructuring partner at KPMG - which is handling the CVA, warned that House of Fraser would be at risk of administration if the CVA does no go ahead.
He said: "The business has been impacted by the mounting pressures facing the UK high street, with the declining profitability of certain stores exacerbated by costly legacy leases which were originally negotiated many years ago.
"With trading conditions unlikely to materially improve in the short term, the future of House of Fraser is at significant risk unless steps to restructure the business both financially and operationally are taken."
A raft of CVAs have been struck in recent months as retailers struggle amid surging costs, rising business rates, competition from online rivals and a slowdown in consumer spending.
Other retailers undertaking CVAs in a bid to keep trading include New Look, Mothercare and Carpetright.
Restaurant businesses have also been seeking to cut their costs with store closure programmes, with Carluccio's, Byron and Prezzo all pushing through CVAs this year.
