UK department store retailer House of Fraser is cancelling all online orders and refunding customers following a reported dispute with its warehouse operator.

In a tweet late yesterday (16 August), the retail group, which was bought by Mike Ashley’s Sports Direct group last week, said: “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 move follows a raft of complaints from customers who had not received goods ordered online. According to the BBC, warehouse operator XPO Logistics is owed GBP30m (US$38.2m) and stopped processing orders last week because of the dispute.

House of Fraser’s website was taken offline on Wednesday amid the payment dispute with XPO Logistics, which operates two warehouses, in Northamptonshire and Buckinghamshire, that handle the retailer’s deliveries to stores as well as customers.

A source told just-style that Ashley and his team have been working closely with various different suppliers and creditors to try and agree a way forward but said that XPO has been “completely unreasonable”. There is currently no engagement, and no plans for any engagement, with no stock moving in or out of the warehouses, the source said. 

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Meanwhile, it is understood hundreds of suppliers to House of Fraser are owed GBP753m but will not be repaid by its new owner, Sports Direct. Some have taken action while negotiations over payments continue.

According to The Guardian, fashion retailer Jigsaw has removed stock from 20 stores, and brands including Karen Millen and Mint Velvet are also understood to have withdrawn some stock.

Sports Direct group bought House of Fraser in a GBP90m deal announced just hours after the chain went into administration.

Richard Lim, chief executive of economics research consultancy Retail Economics, believes the acquisition is a “hugely ambitious move” for Sports Direct.

“The combination of both businesses will yield some vital cost-saving synergies while it is likely that some of the struggling House of Fraser sites will be rebranded to Sports Direct. Nevertheless, this is a part of the industry that is under a huge amount of pressure. Turning around the business will not come easy. The stores are failing to attract sustainable levels of footfall while battling against rising operating costs and shifts in shopper behaviour.”

Neither XPO Logistics nor Sports Direct returned a request for comment at the time of going to press.