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House of Fraser to shut four stores after failure to lower rents

The chain’s new owner Mike Ashley urges landlords to be more “proactive” as he pulls the plug on four stores in its portfolio.

Mike Ashley’s Sports Direct is to shut four House of Fraser (HoF) stores, accusing their landlord of failing to be “proactive” in securing new rent deals.

The company, which bought the struggling department store chain out of administration in August, said it had held talks over 14 weeks with Intu Properties but had been unable to reach agreement.

Its decision to shut the stores – Lakeside in Essex, its Metrocentre operation in Gateshead and sites in Norwich and Nottingham – places hundreds of jobs at risk.

HoF was yet to confirm exactly how many would be lost.

Intu said in response it was looking for new opportunities for the four stores as they had been “under-performing”.

HoF’s statement said: “We had various meetings with the landlord, Intu Properties, and adopted a flexible approach.

Mike Ashley is chief executive of Sports Direct and the owner of Newcastle United

“Despite our best efforts we have been unable to agree reasonable terms for these stores to continue trading.

“Sadly, we are now in consultation with staff about the fact these stores face closure.

“We hope other institutional landlords will continue to work with us in order to save stores and jobs.”

“Despite our best efforts we have been unable to agree reasonable terms for these stores to continue trading.

“Sadly, we are now in consultation with staff about the fact these stores face closure.

“We hope other institutional landlords will continue to work with us in order to save stores and jobs.”

The previous management, who had planned to shut down half the sites in an effort to save the business, were thrown out as he prepared to make the chain become the “Harrods of the high street”.

In addition to Sports Direct and HoF he has further exposure to town centres through a 30% stake in Debenhams and has also recently bought Evans Cycles out of administration.

Mr Ashley also plans to cut 50% of Evans stores.

The high street has endured a brutal 2018 – with Toys R Us and Maplin the first casualties while a string of other big names have been forced to seek rescue deals with landlords.

Pressures have included rising rents, business rates and wage bills at a time of greater consumer restraint in the run-up to Brexit.

Landlords have attacked the growing use of Company Voluntary Arrangements (CVAs) by retailers looking to cut stores and reduce rent bills.

A legal challenge against House of Fraser’s pre-collapse CVA plan – brought by several companies – was settled out of court. House of Fraser fell into Mr Ashley’s hands just days later.

Intu Properties, currently the subject of possible takeover interest, said in response: “We have been advised this morning that the four House of Fraser stores in our portfolio will be closing in early 2019, representing around 1% of our secured rent and 526,000 sq ft of retail space.

We have had numerous meetings with Sports Direct including at the highest level to try to agree terms.

Source From: https://news.sky.com/story/house-of-fraser-to-shut-four-stores-after-failure-to-lower-rents-11554031

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