House of Fraser is cancelling all online orders and refunding thousands of customers potentially millions of pounds, after a dispute with its warehouse operator held up deliveries.
Late on Thursday, the company tweeted:
Due to delays with delivering online orders, we have taken the decision to cancel and refund all orders that have not already been sent to customers. All customers affected will receive an email in the next couple of days. Please accept our apologies for any inconvenience caused.— House of Fraser (@houseoffraser) August 16, 2018
The decision comes after a wave of complaints from shoppers who had not received goods bought online.
House of Fraser took down its website on Wednesday after its warehouse operator, XPO Logistics, “paused” processing orders because of a dispute over payment.
XPO is among more than 1,000 suppliers to which House of Fraser has written to say it will not cover money owed before Friday, when Mike Ashley’s Sports Direct group bought the department store business out of administration for £90m.
The logistics firm operates two warehouses, in Wellingborough, Northamptonshire, and Milton Keynes, Buckinghamshire, that handle all House of Fraser’s deliveries to customers as well as to stores. Access to both warehouses continued to be closed on Thursday as the dispute remained unresolved.
A source close to Sports Direct said it had been forced to cancel orders as XPO was being “totally unreasonable in terms of their demands” and was “refusing to engage in any process” which would “move the situation forward”.
“XPO is trying to hold us to ransom,” the source said.
It is understood that XPO has blocked suppliers and Sports Direct from entering the warehouses. XPO was not available for comment.
Some fashion suppliers have taken action while negotiations over payments continue. Jigsaw has removed stock from 20 stores, and brands including Karen Millen and Mint Velvet are also understood to have withdrawn some stock. These brands run concessions in House of Fraser store and so own unsold items. Ownership of that stock was not passed to administrators or included in Sports Direct’s purchase.
One concession operator said it was continuing to operate as it hoped a deal could be agreed. “We have been getting paid since Friday and are meeting people from House of Fraser next week,” the operator said.
Sports Direct has no legal obligation to pay suppliers money owed before its buyout as their debts were part of the administration. No supplier debts are expected to be paid from the administrators as virtually all the proceeds from Sports Direct’s buyout are going to its banks and bondholders. However, new owners often agree to settle at least some of the debts in the interest of good relations.