DEPARTMENT store chain House of Fraser brought in KPMG to work on restructuring plans as rival Debenhams announced an 80 per cent fall in half-year profits yesterday.
It is understood the House of Fraser rescue plan could see stores close and jobs axed in line with moves taken by other embattled retailers this year.
Fashion brand New Look and electronics specialist Maplin are amongst those to enter into company voluntary agreements, which include rent-cutting deals and shop closures.
Meanwhile, bottom-line pre-tax profits at Debenhams – which has 15 Scottish sites – tumbled from almost £88 million to £13.5m over the six months to the beginning of March.
The trouble follows a “disappointing” Christmas at the retailer, which had to temporarily close around 100 branches during severe snow brought by the “beast from the east”.
Results are below market forecasts.
Chief executive Sergio Bucher commented: “It has not been an easy first half and the extreme weather in the final week of the half had a material impact on our results.
“But I am hugely encouraged by the progress we are making to transform Debenhams for our customers.”
He added: “We are holding share in a difficult fashion market, and, in other categories such as furniture, exciting new partnerships have the potential to transform our offer.
“We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team and the right plan to navigate them and return Debenhams to profitable growth.”
However, shares in the firm fell by as much as 10 per cent at the start of trading.
Russ Mould, of investment service company AJ Bell, said Debenhams full-year profit forecast amounts to a “mild profit warning, given prior management guidance of £55m £65m range.
“That excludes the £28.7m in additional costs and charges relating to the acceleration of the redesigned strategy.
“This latest drop in annual profits will only add to a grim sequence of declines which makes it clear just how serious Debenhams’ competitive position really is.”
The retailer has closed two stores since October and has identified a further 10 across the country that could be shut down in due course.
In February, 320 staff were made redundant in a shake-up of middle-management. House of Fraser, which is owned by Chinese conglomerate Sanpower, will announce its turnaround plan within the coming weeks.
The business has already begun talking to landlords to reduce the size of its stores in a bid to cut its rent bill.
Yuan Yafei, chairman of Sanpower, has voiced his commitment to House of Fraser and has been pumping millions of pounds into the retailer to keep it on an even keel.
The company operates from four locations in Scotland.
The developments compound bad news for the UK High Street, which has seen thousands of workers lose their jobs this year.
These include employees at Toys R Us, which has closed all British outlets.
Restaurant chains have also been hit by a squeeze on consumer spending.
Byron, Jamie’s Italian and Prezzo have all announced plans to shut stores as part of restructuring plans.
Mothercare and Homebase are also under intense pressure.
Retailers have been battling rising costs, fall in consumer confidence and online competition.
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