Grimsby’s House of Fraser is to close early next year.
The department store had been due to pull the shutters down in January this year after then-owner C-Banner entered into a CVA restructure, but a brief reprieve saw it saved from the immediate axe when Mike Ashley swooped to add the high street chain to his retail empire.
A £90 million package and landlord negotiations gave it a stay of execution, but Hull closed in August, and further closures were hinted at following his group’s recent results release.
It appears Grimsby is one of the first to fall, having been part of a fragile 15 kept on back in September 2018.
Once Binns, it traded on, with significant changes to the range, but now the landlord has called time, serving notice, with March 1 confirmed as the day it will close. A total of 42 jobs will be lost, with concessions Dune and Caffe Nero also to close.
In a statement, Frasers Group said: “The Group had been working closely with the landlord for some time on a solution to keep the store open. Over that time the landlord has not charged rent, but the day-to-day operating costs of the store have been considerable, not least the business rates, but keeping the store open was no longer viable.
“We are thankful to the landlord for working with us over the past few months, to try to find a long-term solution for the store.”
Referring back to the initial closure threat in 2018, the statement concluded: “It has only been through the joint efforts of both Frasers Group and the landlord in question that the store has remained open for a long as it has.”
Speaking after his Sports Direct business released its results and revealed the name change earlier this week, Mr Ashley labelled the business rate system “broken and unworkable” as he said more closures would come in “months”, adding he “could not keep loss-making stores open”.
It comes as owner of Freshney Place, Capreon, looks to offload the shopping centre House of Fraser is enveloped by, having so far failed to realise a consented leisure development, with a multiplex cinema as the heart of it, on the Riverhead.
Chartered surveyor, Lawrence Brown, is a voice of authority on Grimsby town centre development, having served on the private-sector led regeneration group. The managing director at Scotts Property said: “The fact it is closing is disappointing, but reflective of retailing across the UK. Unfortunately, like elsewhere, shoppers in Grimsby don’t shop enough actually in the shops and while people insist on shopping online, shops are inevitably going to close.
“If we as consumers don’t go in to the shops to buy the goods, then what message does it send to those around the boardroom table? Unfortunately that’s how business works.
“It means in terms of a department store, we are just left with Marks and Spencer in Grimsby. If we as consumers want to make sure we retain it, then quite simply we have got to put the mouse down and pick our coat up.”
Potentially switching Cineworld’s interest in Grimsby to within the wider shopping centre estate, with Riverhead stalling, has recently been floated by civic leaders.
“It is possible, but would require a lot of reconfiguration,” Mr Brown said. “If Frasers Group has been served notice that indicates the landlord has positive aspiration for it. If we could get a cinema in, linked in to the shopping, then fantastic, but we are a long way off from that.”
And “gamesmanship” between landlord and tenant cannot be ruled out either, though the statement is cordial in nature, with Mr Ashley not known for sitting on the fence.
“House of Fraser has traded without paying rent, Mike Ashley is a very rich man, and with results just out it could be gamesmanship,” Mr Brown said.
Sales jumped 14 per cent in the six months to October 27 to £2 billion with operating profits more than doubling to £208.5 million. “It is a multi-faceted situation, with directors, shareholders, consumers, residents in the town in which the premises are affected and of course the employees, all having a stake,” Mr Brown said.
“When it comes to landlords and rent we need to bear in mind shareholders aren’t necessarily rich individuals, often it is pension funds invested, and as consumers we have to remember when shopping we are putting money back in to our own pensions.”
Prior to Mike Ashley’s arrival, and negotiations that have seen House of Fraser trade on rent-free, C-Banner was having to meet an annual rent of virtually £1 million, or £19,000 per week, as part of a “sale-and-leaseback” agreement for its Grimsby store.
The 92,400sq ft premises was one of a raft of directly-owned stores sold off by House of Fraser in 1999 to raise much-needed capital for the group. But the sale came with a 40-year lease lock-in that added up to a massive multi-million pound national rent bill.
It was revealed when the property – 9-21 Victoria Street West – was put on the market again in early 2017.
The £986,423 Grimsby rent, revealed as part of a sale brochure marketed by KLM Retail, highlighted the challenge ahead.
Not technically part of Freshney Place, although offering access to and from it, earlier sales had been seen as a sign of confidence in the town. It was bought for £10.5 million in August 2009 by Development Securities, changing hands 13 months later for £13.1 million, to a pension fund managed by Rockspring Property Investment Managers.
Until the notice was served, it is thought a 20 year lease remained in place.
