House of Fraser's flagship Oxford Street store saved from closure

21 August 2018, 08:05 | Updated: 21 August 2018, 09:56

House of Fraser's flagship store in London's Oxford Street has been spared closure, new owner Sports Direct has said.

Prior to the business going into administration earlier this month, the key site was one of 31 of the department store chain's 59 branches earmarked for closure, with 6,000 jobs in the firing line.

The closures were due to take place under a Company Voluntary Arrangement CVA - a controversial insolvency mechanism which has been deployed by retailers including Carpetright, Mothercare and New Look this year.

But this plan fell by the wayside once the 169-year-old department chain store fell into administration.

Within hours of the company entering administration, Sports Direct tycoon Mike Ashley agreed a £90m cash buyout of the struggling chain.

James Keany, at CBRE, the real estate services and investment firm which is advising Sports Direct on all property-related matters regarding HoF, said of the agreement to keep the Oxford Street store open: "This deal only happened because all parties realised it was better to keep the store open and fully operational.

"It was a real case of landlord and tenant genuinely working together and at great speed.

"Everyone was sensible about the terms of the transaction."

It is the first deal to be agreed on a House of Fraser store since Sports Direct stepped in earlier this month.

It is unclear how many of the other 30 stores which were in line for the axe will stay open.

Mr Ashley pledged at the time that he would do his best "to keep as many stores open as possible" - adding it was his ambition "to transform House of Fraser into the Harrods of the high street".

Michael Murray, Sports Direct's head of elevation, suggested the speed with which the deal was struck showed a commitment to turn around the House of Fraser business.

He said: "We said we would keep as many stores open as possible, and in less than a week we have saved the biggest store.

"Oxford Street was meant to close in January and now it's safe, which is great news for all parties.

"Everyone must remember it was a bust business and we need landlords, councils and brands to pull together to save House of Fraser on the high street."

Last week HoF's administrators Ernst & Young (EY) revealed the chain owed £484m to its creditors, including designers like Gucci, Armani and Diesel before its collapse.

This includes £2.4m to luxury handbag maker Mulberry, which operates 21 House of Fraser concessions.

It warned it was expecting to take a £3m hit to its profits after the collapse of the high street retailer.

Mulberry shares fell by as much as 30% on Monday after the profit warning.