Mike Ashley has said he may retain up to 47 of House of Fraser’s 59 stores, as part of his revitalisation plans for the business he acquired in a pre-pack deal on Friday.
The retail tycoon has said that he may allocate some of the space in certain branches of the stores to his Sports Direct chain and his luxury multi-brand boutique chain, Flannels. Among those stores that may yet be saved is House of Fraser’s Oxford Street flagship.
Under previous CVA plans, House of Fraser said it would be closing the Oxford Street store along with 30 other branches of the department store chain by early next year.
Ashley emerged as the winning bidder for the chain last Friday, paying £90m for it, and seeing off competition from fellow retail tycoon Philip Day and turnaround specialists Hilco and Alteri Investors.
Speaking to The Sun, Ashley expanded on his statement on Friday saying that he intended to turn House of Fraser into the “Harrods of the high street”. He said the introduction of luxury brands via Flannels, which sells labels such as Saint Laurent and Burberry, would revitalise the stores along with an omnichannel approach to high quality service.
“In Harrods you get some exceptional services. What we would like to do is introduce a ‘concierge click and collect’ at House of Fraser. When you go online and say you want to collect goods in-store, you should be able to book a time, book a changing room and book a stylist,” Ashley told the newspaper.
Ashley’s ambitions will be contingent upon gaining the support of House of Fraser’s landlords who were resistant to the department store’s previous CVA plans with some even pursuing legal action to oppose them, though the case was settled before it went to court enabling the retailers to attract a new investor. Yesterday it was confirmed that CBRE has been appointed to begin negotiations with the chain’s landlords. In the newspaper interview Ashley urged landlords to “give us a chance”.
However he will also need to win over some of the chain’s suppliers who have been left out of pocket as the brand was taken briefly into administration to enable its sale to Ashley, thus wiping out debts. It is believed some suppliers and concessionaires are owed up to £70m and much of Ashley’s £90m payment will go towards paying off lenders and bondholders leaving as little as 2-3p in the pound for unsecured creditors.
Ashley has told suppliers they will be paid for any stock sold since Friday but it is not clear if they will have any debts paid from before the administration. Yesterday losing bidder Philip Day urged Ashley to pay the out of pocket suppliers and do the “honourable” thing.