MT WALLETTE, our retailing correspondent, on the latest set-back for Croydon’s plans for a £1.4bn temple to shopping
House of Fraser, the troubled department store, has this morning been snatched out of administration by Newcastle United owner Mike Ashley for a bargain-basement price of £90million. Just four years ago, House of Fraser changed hands when the business was valued at £500million.
Today’s deal, announced within a couple of hours of House of Fraser putting itself into administration, still leaves uncertainty for the 17,000 whose jobs depend on the store, including several hundred who work in Croydon.
Ashley, the founder of Sports Direct, will now get to pick and choose which House of Fraser stores will, or will not, continue in business.
“The group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business,” said a statement released to the Stock Exchange by Ashley’s Sports Direct group.
The upscale House of Fraser department store in Centrale is one of the last prestige high street brands left in Croydon town centre, which is showing the decay caused by six years of development blight, as the area waits for “Croydon Partnership” Westfield and Hammerson to activate their plans.
Croydon’s House of Fraser store recently escaped possible closure in one of the business’s aborted rescue plans. It is due to be open for normal trading again today, but there are no guarantees that it will survive the business going into administration.
Sarah Jones, the Labour MP whose Croydon Central constituency includes North End and its two large shopping centres, reacted to the gravity of the situation this morning when she said, shortly after the business had been placed in administration, “Devastating news about House of Fraser and their 17,000 members of staff – including those in Croydon. I will be contacting the administrators today.”
Jones ought to have a particular insight into the travails of the town centre: her mother was for many years a governor of the Whitgift Foundation, the owners of the Whitgift Centre, who are dependent on the shopping centre and other properties’ rents and revenues to finance its private schools and almshouses.
Sports Direct’s decision-making could all mean that Croydon Council’s chief exec, Jo “We’re Not Stupid” Negrini, may need to dust off her secret contingency plan for the town centre.
Any closure of House of Fraser in Croydon is likely to impact on plans for Hammersfield, the £1.4billion redevelopment of the Whitgift and Centrale shopping centres which has been promised since 2012. Westfield’s Aussie founders have sold up to a French business, while their reluctant partners in Croydon, Hammerson, owners of Centrale, appear to have cooled their interest in any redevelopment schemes.
The potential loss of the rents from one of its biggest tenants in Croydon – House of Fraser occupies 168,000 sq ft of prime retail space – won’t do anything to improve the state of Hammerson’s business.
And for any assessment of the likely impact of the closure of the HoF Croydon store, the local MP and council only have to look across the road from Centrale to the site of Allders, a once proud Croydon institution, which itself went bust in January 2013, leaving its floors to be filled with a jumble of small, low-rent concessions.
As one Croydon resident reacted to today’s news on Twitter, “This surely is likely to have an impact on the viability of Westfield? What use is it having a new shopping centre when there’s so much retail space already empty?
“Westfield increasingly looks like a mirage on the horizon.”
House of Fraser’s collapse is just the latest in a string of high street retailers to have gone under amid the rise and rise of online shopping.
The department store chain today said talks with its investors and creditors had “not concluded in a solvent solution”. The administration was arranged at a brief court hearing this morning.
By 10am, House of Fraser had been bought by Ashley.
HoF had previously earmarked 31 of its stores – though not Croydon’s – for closure under an earlier, failed rescue deal.
House of Fraser was a once proud institution on the High Streets around Britain. The retailer opened its first store in Scotland in 1849.
Earlier today, the company said its proposed administrator, Ernst & Young, planned to keep the business trading in its 59 stores around the country while it attempts to arrange a sale.
Ashley’s interest had been well trailed. “Significant progress has been made towards completing a sale of the group’s business and assets,” House of Fraser said in a statement to investors.
“The proposed administrators are expected to continue to progress those discussions with a view to concluding a transaction shortly after their appointment.”
Ashley has long wanted to take control of House of Fraser. He bought an 11 per cent stake in 2014, when 89 per cent of the business was sold to the Chinese conglomerate Sanpower in a deal worth £480million.
The Sports Direct founder has considered buying a department store chain for several years. He also has a 29.7 per cent stake in House of Fraser’s rival, Debenhams, which also has a store in Centrale.
By buying House of Fraser out of administration, Ashley is able to decide which stores to take on and keep operating, and is able to discard the less-profitable outlets.
Landlords Hammerson and those working in Croydon’s House of Fraser, will now have an anxious wait to discover what Ashley decides for the future of his store in Centrale.
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