Call for review on retail rents | City & Business | Finance



The Chinese-owned department store is looking to shut 31 of 59 sites, with up to 6,000 job losses in a move seen as the “last viable” option to save the business.

Under an insolvency procedure known as a company voluntary arrangement (CVA), House of Fraser will pay a reduced rent on the 31 stores for seven months before they close. It will also seek a lower rent on 10 stores to be kept open.

Chairman Frank Slevin said: “The retail industry is undergoing fundamental change and House of Fraser urgently needs to adapt to the 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.”

A number of retailers and restaurant chains have recently announced CVAs, including Carpetright, New Look, Mothercare and Prezzo as they battle growing online shopping and costs.

But the procedure has raised concerns that it puts other high street players at a disadvantage, while landlords complain they are losing income as other creditors emerge relatively unscathed.

The British Property Federation claims the process was being misused, which risks “undermining the UK’s global reputation and deterring much needed investment into our town and city centres”.

Chief executive Melanie Leech said: “The CVA process is intended to be part of a comprehensive business recovery plan. “Property owners, looking after savers and pensioners’ money, will support businesses who demonstrate this commitment, but must protect those pensioners against unfair action that penalises their interests.

“Urgent action is required and we are calling on Government to undertake a review.”

Revo, which represents stakeholders in the UK’s £340billion retail and leisure property sector, said it was “beyond doubt” the process is being abused.

Chief executive Ed Cooke said: “We have also called for intervention on the use of CVAs.

“The process is being applied in a way we don’t think was originally intended.”


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