All online orders are being cancelled by House of Fraser. They are also set to potentially refunding thousands of customers with millions of pounds following a dispute with its warehouse operator that held up the deliveries.
In a tweet, the company said late on Thursday: “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.”
The said decision follows a series of complaints the came from numerous shoppers who claimed not receiving the goods purchased online.
On Wednesday, House of Fraser took down its website after XPO Logistics, its warehouse operator, “paused” the processing orders due to a dispute over payment.
XPO is among the over 1,000 suppliers to which House of Fraser has communicated to inform that it will not cover money owed before Friday when the Sports Direct group of Mike Ashley acquired the department store business out of administration for £90 million.
The logistics company operates two warehouses that are in Milton Keynes, Buckinghamshire and Wellingborough, Northamptonshire. The warehouses handle all of the deliveries of House of Fraser to its customers as well as to the stores. Access to both the warehouses was still closed on Thursday as the dispute continued to be unresolved.
A source who is close to Sports Direct disclosed that it had been compelled to cancel the online orders as XPO was being “totally unreasonable in terms of their demands.” It also said that XPO was “refusing to engage in any process” which would potentially“move the situation forward.”
The source added: “XPO is trying to hold us to ransom.”
It is assumed that XPO has blocked Sports Direct and various suppliers from entering the warehouses.
Various fashion suppliers have already taken some action while the discussions over the payments continue. Jigsaw has removed stock from approximately 20 stores, and brands including Mint Velvet and Karen Millen are also understood to have removed some stock. These brands operate concessions in the stores of House of Fraser and so it owns the unsold items. The ownership of that stock was not passed to the administrators or included in the purchase of Sports Direct.
A concession operator said that it was continuing to operate as it is hoping that a deal could be soon agreed upon. The operator disclosed: “We have been getting paid since Friday and are meeting people from House of Fraser next week.”
Sports Direct has no legal obligation to pay the money owed to the suppliers prior to its buyout since their debts were part of the administration. The supplier debts are not expected to be paid from the administrators as virtually all the proceeds from the buyout of Sports Direct are going to its banks and bondholders. However, new owners often agree to settle at least some amount of the debts in the interest of establishing good relations.