House of Fraser staff await Shrewsbury store D-Day

Mr Ashley has already sealed a deal to save Telford's House of Fraser store – but the fate of another two still hangs on a knife-edge.

After the reprieve for the Telford Shopping Centre store last week, the wait is now on for the stores in Shrewsbury and Wolverhampton.

Talks with the owners of the Beatties site are continuing, but Mr Ashley's Sports Direct business, which bought the ailing department store group out of administration for £90 million, has warned it will have to announce some store closures tomorrow.

Yesterday Mr Ashley blamed “greedy landlords” for potentially hundreds of job losses.

They tycoon, who also owns Sports Direct, has been in tense talks with landlords over rents in recent weeks.

Those negotiations have resulted in around seven House of Frasers being saved from closure, including London’s Oxford Street and Telford. But other stores remain under threat.

The former Rackhams store in Shrewsbury is among those that have been earmarked for closure but that is now under review.

Around 80 staff work at the Shrewsbury store and another 279 are awaiting their fate at the company’s Beatties store in Wolverhampton.

It is believed the future of the stores could be clarified as soon as tomorrow.

A spokesman for House of Fraser said: “Some landlords are being very collaborative. However, some greedy landlords would rather see the stores close than help save the jobs of hundreds of people.”

Stores in Middlesbrough, Darlington and Carlisle were this week the latest to be given a reprieve. Along with the shop at Telford and the flagship Oxford Street outlet in London, they had been set for closure under the failed rescue deal drawn up by the previous owners. Instead they are now to stay open.

James Keany, head of national agency at property agents CBRE, which has been handling talks with landlords for Mr Ashley, said: “The team have been working round the clock and over the bank holiday weekend to secure as many deals as possible safeguarding stores and jobs for local communities.”

Mr Ashley has said he wants to retain around 80 per cent of House of Fraser's 59 stores, instead of the previous plan to close more than half, but many landlords are still unhappy.

Only a handful are being offered the same level of rent that was being paid for stores before House of Fraser's fall into administration. Most of the rest have been offered rents linked to an outlet’s turnover.

But some landlords have been offered deals in which they would receive no rent, but will be paid a service charge and get their business rates covered.

Compromise deals

Under the terms of the administration, Mr Ashley should be able to start this ownership of the business with a clean slate, but the size of the bills owed to landlords and fashion chain suppliers means they want to strike compromise deals that will see them recover some of their money.

House of Fraser had debts of close to £1 billion when it collapsed, with more than half the money owed to suppliers such as Polo Ralph Lauren, handbag maker Mulberry, upmarket footwear retailer Kurt Geiger and women’s fashion brand Phase Eight.

One of the biggest single trade creditors was distribution firm XPO Logistics, which suspended deliveries to House of Fraser stores over the £30m it was owed. It has now restarted deliveries after crisis talks with Mr Ashley's team.

More than 1,000 suppliers to House of Fraser – including Tommy Hilfiger, Barbour, Mint Velvet, L'Oreal and even the Pretty Green fashion label launched by former Oasis frontman Liam Gallagher – are unlikely to receive any money from the company's administrator, accountancy EY. Sports Direct is in talks with them but is understood to have only promised to cover money owed since Mr Ashley bought the business.

The £90 million Sports Direct paid for House of Fraser went towards paying off its banks and bondholders, who were owed a total of around £400 million.