Suppliers have voiced fresh concerns for House of Fraser ahead of a “crunch time” next month when the department store will be faced with rent and rates bills at the same time it is building its inventory ahead of the key peak trading period.
“It is not critical yet, but it will be from the end of August, and early September onwards,” said one supplier. “The problem is that some of the credit insurers wanted to wait to see what happens with C Banner and now that [investment] has been delayed, they will run for the hills.”
“The major suppliers are not going to pile stock in if there is a chance that they will get [next to nothing] if it tips over the edge,” the source added.
Various concession partners and suppliers told Drapers this week that they remained hopeful the CVA would go through, but some said they were limiting exposure to the department store chain.
One footwear source said: “It’s a matter of waiting and seeing. The hope is that the legal challenge from the landlords is dealt with by the courts as quickly as possible so the CVA can proceed and the new investment put into the business.”
One young fashion source said: “We are treading very carefully and limiting the amount of exposure we have. We were unable to change the payment terms so we are de-risking the exposure overall. Credit insurance at the moment is non-existent as far as we can tell.”
It comes as Sports Direct group owner Mike Ashley holds talks with House of Fraser over a £50m investment deal.
Sports Direct sent a letter to HoF, which was seen by Sky News, saying it would like to look at making an “alternative offer”, which is thought to be in the form of a loan or equity injection.
The sports retailer said it had cash resources available for investment and the ability to support HoF in areas such as “warehousing, online sales and the running of the business generally”.
Ashley’s Sports Direct group already owns a 11% stake in House of Fraser and tried to buy it in 2014, when Sanpower took control.
However, a source close to HoF said: “It is not exactly a harmonious relationship – [Ashley] challenged HoF in the courts about revealing trading data – so it will be interesting to see what he actually wants.”
He added: “Interesting that Mike has got another foot in the door, but there is no way it will just be a loan without something in return.”
Drapers also understands that the plans to relocate the HoF head office, which were included as part of the CVA proposal, are now not expected to go ahead.
Drapers has contacted Sports Direct for comment and HoF declined to comment.