Focus: Which fashion retailer could collapse next?

To add to New Look’s pain, South African tycoon Christo Wiese, who led a buyout of the retailer in 2015, has problems at home. His Steinhoff retail conglomerate is battling a catastrophic accounting scandal. In November, Wiese wrote off the value of New Look to zero after it swung to a loss. Credit ratings agency Moody’s warns its precarious finances could “prove unsustainable” and a return to profitability is “uncertain”.

With the death of the department store often foretold in an online age where specialists thrive, the 59-strong House of Fraser chain looks vulnerable.

The company wrote to landlords last month to ask for rent reductions, despite a £25 million cash injection from its Chinese owner Sanpower in September — £10 million of equity to beef up its distribution centre and £15 million to see it through Christmas. It also inked a deal for £30 million to sell to another Chinese business the intellectual property rights to House of Fraser’s now-defunct own-brands, and managed to find £26 million of cost savings. Alongside poor festive trading, it revealed half-year losses widened to almost £8.6 million.

Insiders say the landlords are sympathetic and new leases should be negotiated soon. The retailer plans to reduce its shop space by 30% over the next five years by sub-letting basements or top floors without closing stores altogether.

However, there are concerns that, despite the recent £25 million hand-out, Sanpower’s investment focus is elsewhere in its huge empire. House of Fraser chief executive Alex Williamson, who joined from the Goodwood Estate, famed for racing rather than retail, took up the reins last year after a series of regime changes.

Williamson, in China for meetings with Sanpower this week, has insisted that Yuan Yafei, the Chinese tycoon and ultimate boss, is committed to the business. But if the capricious billionaire pulls the plug, House of Fraser will be in dire straits. One retail source said: “I wouldn’t be at all surprised if, five years from now, it would be a trading retailer in China, but not in Britain.”

House of Fraser sold £175 million of five-year bonds as part of a 2015 debt restructuring. They are now trading at 75p on the pound, near a record low.

Similarly to New Look, a credit insurer has already decided to withdraw cover to some suppliers including Ted Baker this month.

A downgrade from Moody’s to a “very high credit risk” in December has caused more jitters over its future.

Debenhams isn’t yet under the same pressure as New Look and House of Fraser. The price of its bonds have remained steady, in stark contrast to its share price. Unlike its two sicklier rivals, it still makes profits, but it is not out of the woods yet. Weak Christmas sales, coupled with a profit warning, sent the share price down to 28.18p from a year high of 56.06p. Newish chief executive Sergio Bucher said debt was £276 million in 2016-17. Analysts expect it to be slightly higher this year.

The retailer — which has been targeted by short-sellers — is considering closing 10 of its 176 stores over the next five years and there has been speculation that it may cut dividends in April. The rent bill for its store portfolio — some of which are on leases of more than 19 years — is a whopping £225 million per year. Moody’s downgraded it last month, citing the weak retail market.

All three retailers say they can weather the storm under their new bosses, with more focus on beauty bars, gyms and in-store cafés or just a recalibration of what wares they will sell to whom.

“Things will get better for retail but not before there are loads of casualties,” says veteran retail analyst Richard Hyman, speaking a week after the owner of Joe Bloggs and Elizabeth Emanuel went bust. “There are too many mouths to feed.”

One restructuring expert, licking his lips, adds: “I would be amazed if all three were to survive in the next three years.” The clock starts now.