Business

House of Fraser rejects collapse reports

House of Fraser sign Image copyright PA

House of Fraser has denied reports it is on the brink of collapse as the department store chain insists its rescue plans are on track.

The retailer said it is "inaccurate and unhelpful" to suggest it is struggling to secure the support of its banks.

The talks were continuing and "constructive", House of Fraser added.

The retailer said last month it would launch a company voluntary arrangement (CVA), which allows firms to close loss-making shops and reduce rents.

House of Fraser has 59 stores in the UK and Ireland, more than 6,000 employees and 11,500 concession staff.

It has not said how many stores are earmarked for closure under its CVA or which stores are likely to be closed.

"If we are to deliver a sustainable, long-term business supported by new liquidity then we need to make difficult decisions about our underperforming legacy stores," said chief executive Alex Williamson.

He said the current "inaccurate speculation" was feeding "ongoing uncertainty for my colleagues".

The owner of toy shop Hamleys, China's C.banner, recently agreed to buy a majority stake in House of Fraser.

Image copyright Reuters

The Chinese firm has pledged a cash injection for House of Fraser on the condition the CVA goes ahead.

A CVA is designed to help a struggling company to pay back a proportion of its debts over time.

It involves a strict repayment scheme overseen by an insolvency practitioner and must be approved by at least three quarters of the firm's creditors.

UK high streets have seen a host of big names struggling in recent months, as they grapple with online competition, a decline in consumer confidence and rising overheads.

Toys R Us and Maplin went into administration on the same day in February, while New Look, Carpetright and Mothercare have all entered CVAs.

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