House of Fraser and Poundworld mauled as High Streets die
HOUSE of Fraser and Poundworld were the latest big name victims of tough trading conditions on Britain’s High Streets yesterday. The upmarket department store’s move to shut 31 of its 59 branches, with the loss of 6,000 jobs, was announced by its Chief Executive Officer Alex Williamson.
It coincided with discount retailer Poundworld being poised to announce it is appointing administrators, threatening about 5,300 jobs.
It is yet more evidence of a crisis faced by retailers amid an onslaught from online rivals like Amazon.
A string of retailers and restaurant groups have fallen into administration in recent months, including Toys R Us, Maplin, Warren Evans and Jamie Oliver’s Barbecoa restaurants.
Others, including Mothercare and Carpetright, have resorted to company voluntary arrangements (CVAs) to close outlets and lay off staff.
A CVA is a form of insolvency enabling a business to renegotiate deals with their creditors – mainly landlords being asked to accept lower rent payments for stores.
The problem is set to worsen as retailers recorded their worst year-on-year May performance for 12 years, despite the Royal Wedding, warm weather and two bank holidays, figures show.
Sales were down 2.2 per cent on May last year, making it eight months since instore like-for-like sales have shown growth of one per cent or more, according to BDO’s High Street Sales Tracker.
The data highlights high street volatility, contributing to some high-profile casualties and store closures from the likes of Marks & Spencer and Debenhams.
Stores were deserted for Saturday trading on May 19 as more than 13 million watched the Royal Wedding.
The exodus contributed to a 5.1 per cent year-on-year drop in in-store sales of discretionary items for the third week of the month.
The lifestyle sector saw year-on-year sales drop by 3.8 per cent.
Homeware retailers were hit particularly hard with like-for-like sales falling 15.2 per cent.
Sophie Michael, head of retail and wholesale at advisers BDO, said: “Consumer spending patterns continue to be volatile and unpredictable, making it increasingly difficult for retailers to identify trends and respond. There are growing challenges on High Streets affecting retail performance.”
House of Fraser to close over half its stores
House of Fraser stores hit by the closures include its flagship branch in London’s Oxford Street and shops in Edinburgh, Birmingham and Milton Keynes.
Wales will have no remaining stores as the Cardiff and Cwmbran branches are primed for closure.
CEO Mr Williamson said: “We have a responsibility to take necessary steps to ensure House of Fraser’s survival, which is why we are making these proposals.”
Poundworld’s losses widened in 2016-’17 to £17.1million, from £5.4million of losses the year before.
The retailer was hit with a £5.7million charge for onerous leases – a provision retailers make when the cost of a lease is no longer covered by the income of the store.
High Street retailers blame cheaper costs enjoyed by online competitors who do not need expensive shopfronts, increasing business rates and rising import prices for their struggle to survive.
Toll of job cuts in just six months
January
Jamie’s Italian: 12 restaurants
Tesco: 1,700 jobs
Marks & Spencer: London distribution centre, 380 jobs
Sainsbury’s: Thousands of management jobs to go
Byron: 20 restaurants
East: 50 stores, 314 jobs
February
Morrisons: 1,500 management jobs
Debenhams: 320 jobs
Warren Evans: 14 showrooms, 287 jobs
Jamie Oliver’s Barbecoa: Two restaurants, 80 jobs
Toys R Us: 3,000 jobs
Maplin: 2,500 jobs
March
New Look: 60 stores, 980 jobs
Prezzo: 94 restaurants, 500 jobs
April
Littlewood owner Shop Direct: Three warehouses, 1,992 jobs
Toys R Us to shut all UK stores resulting in 3,000 job losses
Carpetright: 92 stores, 300 jobs
May
Jacques Vert and Windsmoor owner Calvetron Brands: 300 shops, 1,000 jobs
Tesco Direct: Clothing and homewares website closure, 500 jobs
Marks & Spencer: 100 stores and more than 1,500 jobs
Carphone Warehouse: 92 stores
Carluccio’s: 34 restaurants, 500 jobs
June
Mothercare: 50 stores, 800 jobs
Poundworld: 355 stores at risk. More than 5,000 jobs
House of Fraser: 31 stores, 6,000 jobs