House of Fraser has admitted to having just 11 days to save 17,000 jobs as the retailer scrambles to secure a lifeline before its cash runs dry.
The stricken department store chain must pull in fresh funding by August 20 or risk collapse through a failure to pay its bills.
The deadline outlined by the retailer is when a number of suppliers must be paid, including a raft of in-store concessions.
It was revealed in a statement to the Luxembourg Stock Exchange, where its bonds are listed, underscoring how little time bosses have left to save the business.
It’s the credit insurers that matter. If they’ll not insure suppliers then they’ll need cash before delivery. Not that that’s a bad thing. It’s just that moving from – say and for example – 120 days payment terms to cash before delivery swallows vast amounts of working capital.
Which is, of course, the very thing HoF ain’t got.
This isn’t to insist upon a 100% track record but often enough it’s those credit insurers who pull the plug on retail.
As to whether HoF should go. Well, department stores? Mixed retail in expensive and premium High Street locations? Entirely possible that this business idea itself is just dead.
Administrators called in today.
Well, that was pretty good prognostication then….
High street retail might well become but a memory in many UK towns and cities – rents and business rates will slide even further. It seems many UK local councils are determined to put the boot into high streets via daft parking fees.
On recent visits to London’s traditional prime retail streets I sense decay and some desperation – imho/subjectively tourists are only just supporting many stores and many are simple corporate vanity displays.
Purchase a shirt from their Exeter branch last week. Already looking an empty shell. Latest news says Mike Ashley is in advanced talks to buy from administrator.
HoF was an anchor tenant when they opened the Eden shopping centre in High Wycombe so I had a wander round as I’d never been in one. Even then, we’ll before internet shopping took off I wondered what the purpose of HoF was. It struck me as confused about its core market.
+1
Decade or two ago, Sunday used to be fine (as in quiet) to wander round a fairly large shopping centre to look / sometimes pick up stuff.
Then some brain dead moron at the Council decided to implement quite hefty Sunday parking charges in otherwise quiet surrounding (non residential) streets.
Simply stopped bothering after that.
I know they’re public sector etc, but just how effing stupid can these people be?
Debenhams is struggling. John Lewis has made zero profit so far this year. M & S lumbers along…. The department store is doomed.
I agree, Theo. But they’re still seen as anchor tenants by the people (mostly fund managers) who own the various styles of retail parks.
As predictable as the sun rising.
Search house of Fraser tories on twitter and you’ll find it’s all the governments fault apparently
Maybe doomed.
But if Council shite and all their thieving ways were out of the picture–that would give a much clearer picture of who is or is not doomed by reference to their trade rather than by the malign antics of politics/predation.
@PF. Parking charges make sense when you want to stop people driving to save the planet from co2. Of course the other way of saving the planet from co2 is stopping all economic activity whatsoever. Parking charges kill two birds with one stone so what’s not to like? Do you actually want us all to boil to death.
[evidence is weak, or even non existent, to support the catastrophic part of CAGW] +
[evidence is strong to support the loosing your job part if you don’t support the idea of CAGW]
oh dear. We’ll have the business rates are too damn high crowd out again. Which they may well be but not because its unfair competition. (as per Tim’s point of cheap warehouses where no-one wants to spend an afternoon, and a plum highstreet pitch)
HoF seem to have multiple problems. Not helped by councils but lots of shops that aren’t in such trouble have the same councils.
Including companies that are growing and making higher profits.
Could be multiple factors. Does the 4.9% minimum wage pay rise impact? Does the employer contribution to pension impact?
Does commercial rent rises impact?
Does the stock impact?
Does the customer experience impact?
Does the advertising impact?
Does the website impact?
Can be lots of factors impacting the company. If it fails its customers will buy elsewhere – making other jobs in other companies elsewhere in the UK / the world more secure. Or improving things for other companies.
Parking charges and business rates are part of the problem, but it is commercial property rents that are killing the High Street. Opening an independent retail outlet is very costly. Where I live, you’ll pay £25k pa for a tiny shop in a back street, and Laura Ashley is closing because the owner of its premises has increased the rent by a third, while a locally owned department store has closed.
But does it matter? Much retailing is moving online. So there are too many shops in the UK, and many of them could be converted to residential use. Re-populating city and town centres would have many advantages.
Business rates can be a bit of a fucker.
It’s hard to see that they equate to the services provided which just makes them a tax.
Add up rates, NIC, income tax paid by employees or on dividends, VAT paid by customers and (God forbid) corporation tax paid on profits and I suspect that HMG makes more money out of most businesses than ever the owner could hope to.
Andrew
The problem being – from other correspondence I’ve had with them – that, however much you think you’re joking, some of these idiots really do seem to think like that (at least wrt to CO2). They are barking.
Which I guess is why they’re Council – who else would employ them? The *cream* of those that would otherwise be watching Jeremy Kyle…
Theophrastus
yes… up to to a point
Several marginal (but useful and convenient) shops and pubs I used to use have gone under locally – I was simply astonished at the rents a couple of the ex operators volunteered …
I can say with some certainty that around half the independent retailers in my country town would shut if the council enforced the double yellow lines that presently are flouted by “10 minute shoppers” – while some retailers follow the chains out to set up shacks on supermarket sites like Timpsons have done.
“The deadline outlined by the retailer is when a number of suppliers must be paid, including a raft of in-store concessions.”
That puzzled me. Don’t concessions pay HoF to operate within their stores (effectively a rent)? So the concession payments should be to HoF, not from. Isn’t the point of a concession that it’s a mini shop within the store, operated by the concession holder?
If there’s a big payment from HoF, that suggests HoF takes all the money from the customers and then has to pay the relevant share to the “concession” owners. But is that really a concession, rather than a branded department of the store? Or has retailing changed the concept but kept the term?
It isn’t just the parking charges and high rates killing High Street retail, it’s the aggressive beggars.
Last time out, in what used to be a nice east Anglia town, I was accosted on several occasions, not by Big Issue sellers (who I support) or chuggars (who I despise) but by very in-your-face threatening begging that with slightly less people around could easily have become robbery with violence.
No comment on the description of either of the ‘beggars’, that’s not allowed nowadays.
If High Street retail is to survive, someone – the council, or the shops – needs to supply security in those streets. The police have given up.
House of Ashley?
Lady Antonia Zero Hours Contract has a certain ring to it.
Rent and rates surely go together. If rates rise, the value of the property falls. How come there are so many rent increases? And some companies are the victim of upward only rent reviews.
ISTM there is too much retail space, spread too thinly. Some shopping streets will have to disappear (which will cause wails of course). And I thoroughly agree about parking charges. I’d be keener to shop in a town if I didn’t have to pay a couple of quid even to browse.
If I ever go to the sea-side, I send Brighton Council an email to let them know my money is going somewhere else that day.
It’s now going to be House Of Tracksuits:
House of Fraser bought by Sports Direct for £90m
Mrs Nerd spent time yesterday on the website trying to use up a £20 gift voucher- but they have *nothing* we want.
RichardT
I think it is because the concessions pay into the tills at HoF and then are paid for the sales made at a later date. It makes little sense for credit card transactions but would have been a sensible idea for cash and cheques.
Ken
Makes sense even for card sales: as a customer I don’t like being told I have to use a different till for some items in my basket, sort of thing that makes me decide I don’t need it anyway.
Theo: £25 grand for a back street shop? How many square feet? I charge £6,000 for a suburban high street shop for 485sqft.
Outside London and a few other prime sites, rents haven’t gone up in years: mostly they’ve gone the other way. I say that as one of those hated commercial landlords.
Business rates are a problem, but they’re not new. Parking is a bigger one. But the bigger issue is structural: shopping, as in going to physical shops, is in long term decline. The internet is speeding it up, but the demise of the ‘housewife’ and the daily visit to the shops is also a factor.
Few years back I ordered a coat from House of Fraser online, taking advantage of a rather hefty discount. Only they sent me the entirety wrong item, which meant me having to repack it, carry it to a post office in France, ship it back and claim the refund (which they paid). Only when I tried to get them to send the correct coat they had to treat it as an entirely new order, and the sale had ended. So I ended up buying a different coat from someone else.
They’re going bankrupt, you say? Now there’s a surprise, eh?
Must’ve been an expensive coat, Tim, to have that sort of knock-on effect.
Ignore me. It’s that time of the week.
jgh – appears to be normal to me.
I looked into a retail shop earlier this year, was £7.5k pa for 520 sq ft just around the corner from the main shopping street and with considerable footfall (also where we tend to park when we are in town). Distance between that shop and the highest rent place per sq ft in the town is under 75 metres and can see that place from outside the door.
Our local council owned shopping centre last I heard was making a loss. One of its flagship shops, M&S, is shutting this month and the council had written to the company asking them not to shut the shop.
Understandably M&S didn’t do as the council wanted. Anyone want a big shop next to the train station and with part within a shopping centre?
jgh
Less than 400 sq ft, in a “sub-regional centre”. Unsurprisingly, it’s still unlet.
My wife had a sideline in running courses for budding local entrepreneurs. Her advice was hold off getting premises as long as possible. So many redundancy payments are squandered on shop rents….
I’m not saying that rent and rates aren’t hurting but it always feels like “it’s all the government’s fault” rather than facing the reality that internet retailing is cheaper or new competitors are eating their lunch or something else.
I don’t want to go to the fucking hallowed high street. I like buying games on Steam, Blu-rays from Amazon and shirts from Charles Tyrwhitt, all of which I can do while sat in my pants with a beer in one hand at midnight.
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@CJ Nerd
HoF have announced they’re still honouring gift vouchers.
So HoF is going the way of Allders anno 2004-05.
Quelle surprise.
Obsolete business models will do that.
I joked that Amazon should buy up ToysRus and re-brand them as “Amazon Toy Showrooms” cos that’s all they really are these days.
“HoF have announced they’re still honouring gift vouchers.”
Meanwhile, 17,000 employees will find that under Ashley they can work as independent contractors on zero hours, and they can kiss their pension scheme goodbye.
Meanwhile, 17,000 employees will find that under Ashley they can work as independent contractors on zero hours, and they can kiss their pension scheme goodbye.
Possibly. But as the alternative appears to be no job at all, they may be grateful for what they can get.
Alex – that’s two jobs. Independent contractors work on the contract, zero hours staff will be workers or employees as cannot force contractors to do the hours.
Heck, a contractor can send someone else to do the job.