Concerns mounting over future of department store group

Department store group House of Fraser – which has a flagship operation in Birmingham – is urging its landlords to be lenient and to reduce rents across its portfolio as it looks to stave off apparent financial woes.

Reports emerged over the weekend that the retail group was urging its landlords to be tolerant as fears grew that the company could be the latest big name retailer to suffer problems as a result of the tougher trading conditions.

Debenhams set the trend for the department store sector when it released poor Christmas trading results last week. The announcement had an immediate impact on the group’s shares, wiping out £70m of the group’s value.

Meanwhile, Toys R Us has already announced a series of store closures and concerns remain about the health of the overall group.

What will be all the more concerning not just for House of Fraser, but for the retail sector in general is that this latest move is akin to that taken by BHS just prior to its collapse in 2016.

The group’s store in Birmingham – for so long known as Rackhams – used to be the jewel in the crown of the city’s retail offering.

However, its dominance has gradually been eroded in recent years as competition grew and the retail focus of the city centre shifted due to new developments such as the Bullring, Mailbox and Grand Central.

It now has to compete with rivals Debenhams, John Lewis, Selfridges and Harvey Nichols, all of which have newer stores in the city.

The department store building is still a prime asset even though its Corporation Street site is no longer the first port of call for many shoppers in the city.

The building itself was sold three years ago by British Land to Legal & General for £71.4m.

The 490,000 sq ft store was part of a sale of £256m of retail and office property that also included a retail park in Hull and a mixed use block in Maidenhead.

Its Midlands portfolio also includes the former Beatties store in Wolverhampton.