The group would not comment ahead of its Christmas trading statement on Monday. However, market sources said that at least six of its 52 stores would close following a review by the new chief executive, John Coleman.
The shake-up will hit smaller stores in particular, with Arnotts outlets in Scotland and Binns stores in the north of England thought to be on the hit list.
However, the group is not understood to be planning a full-scale rebranding that might wipe out many of its 18 trading names.
Many stores, such as Rackhams and Dingles, attract loyalty from local shoppers. Instead, the review has focused on outlets in less promising locations.
New shops, however, of which four are planned by 1999, are likely to open under the House of Fraser name.
"It's not a question of names disappearing, but the bigger, better stores surviving," one market source said.
"The company's old buying policies were unfocused. Now Fraser is looking at five core types of customer: classic, career movers and label-lovers among women, and smart career and fashion-conscious men."
The group's performance has been disastrous since it was spun off by the Fayed brothers from Harrods in 1994.
Profits last year fell to pounds 14.3m from pounds 34.5m at flotation, and provisions of pounds 40-50m to cover the review will take Fraser into a first- ever full- year loss this time.
Analysts also expect Christmas to have been sluggish, though trading picked up in the January sales.
Mr Coleman was installed last April after the sacking of Andrew Jennings. Chairman Brian McGowan remains at the helm, but his tenure depends very much on Mr Coleman's success, analysts say.