House of Fraser cancels online orders as brands consider exit

The embattled department store chain House of Fraser has cancelled all orders placed online after a dispute with a warehouse operator.

The company has apologised to customers and said it would be issuing refunds.

The move comes after the chain's website was taken offline amid complaints from customers about delayed deliveries since the company was bought by Sports Direct for £90m last week.

XPO logistics (Frankfurt: UX2A.F - news) , which operates a House of Fraser distribution centre in Wellingborough, has told employees to stop accepting orders from the department store.

It has halted work as it tries to convince Mike Ashley, the billionaire founder of Sports Direct, to honour existing contract terms. XPO is owed more than £30m.

HoF has told suppliers they will not be paid for orders dispatched before 10 August.

Jigsaw, which was owed more than £440,000, has told Sky News it pulled its brand from more than 20 stores last weekend.

According to Sky (Frankfurt: 893517 - news) sources, brands that are owed millions of pounds are considering leaving the chain.

They also called into question Mr Ashley's ambition to turn HoF into the "Harrods of the High Steet".

"Some of the biggest brands are in a 'Mexican standoff' with Mike Ashley over debt. They are owed a great deal of money and are threatening to leave stores unless he pays a significant portion of it over the next few days," sources said.

"They are arguing that the new owner will not be able to build the 'Harrods of the High Street' without them but there is a concern about the unpredictable businessman's handling of this.

"Does he truly want luxury brands in his stores or is he planning to let them go and do something else?"

Most of the £90m Mr Ashley paid for the store will be used by the administrator to pay banks and bondholders. There will be very little left for suppliers, like Tommy Hilfiger, Topshop and Mango.

A message posted on the HoF's website said: "We're working hard to makes some improvements to the website. Don't worry, we will be back up and running as soon as possible."

And on Facebook (NasdaqGS: FB - news) it said: "We have taken the decision to cancel and refund all orders that have not already been sent to customers.

"We didn't take this decision lightly, but since we cannot give our customers clear assurances of when their orders will be delivered, we believe cancellation is the best option.

"All customers affected will receive an email about the cancellation and refund in the next couple of days.

"Please accept our apologies for any inconvenience caused and thank you from everyone at House of Fraser for your patience at this time."

The announcement was met with dismay by some customers who had placed orders online, some several days ago.

One said on Twitter (Frankfurt: A1W6XZ - news) : "Absolutely disgraceful. Ordered a £90 purse last Thursday. Yes a week ago for my daughter's birthday. Not 1 email concerning delivery or info and now order cancelled and you say email in a few days!!! Get my money back ASAP"