Sports Direct mulls further House of Fraser closures
Sports Direct may close up to two-thirds of the House of Fraser store estate as it attempts to stabilise the business it acquired out of administration a year ago.
According to the Financial Times, Sports Direct chief Mike Ashley may cut as many of its 59 stores as the chain's former owners – Chinese group Nanjing Cenbest – had planned to do before it fell into administration.
When he bought the business for £90m, Ashley pledged to keep as many of the stores open as possible and salvaged locations, such as the Oxford Street flagship, that had already been slated for closure.
Ashley said at the time that his ambition was to create "the Harrods of the High Street" with the chain. It was later revealed that Ashley planned to create a mini higher end chain of stores within the group, called Frasers.
The plan was for around seven stores, including the Glasgow store, which already traded under the Frasers brand, to stock higher end brands with the remaining stores stocking more mainstream options.
However when Sports Direct announced its delayed results last month, Ashley admitted the problems at the chain were greater than he had thought and had the extent been known before he acquired it, it was likely he would have proceeded with the purchase.
"[...] as we have continued to look under the bonnet as we integrate the business, we have found that the problems are nothing short of terminal in nature," he said as he announced the group's annual results.
Ashley went on to add: "We are continuing to review the longer-term portfolio and would expect the number of retained stores to reduce in the next 12 months.
“On a scale out of 5, with 1 being very bad and 5 being very good, House of Fraser is a 1, albeit we are trying very hard to turn the business around this will not be quick and it will not be easy. Even though we do believe there could be a bright future for House of Fraser, and indeed have publicised our Frasers vision which we are very excited about, if we had the gift of hindsight we might have made a different decision in August 2018.”
A source close to the situation told the Financial Times: “All he needs is 15-20 refurbished stores trading in the Frasers format. Around 20 will almost certainly shut and I’d say another 20 are up in the air."
Despite the challenges posed by the House of Fraser acquisition, Ashley's appetite for buying troubled businesses seems undimmed. Today he acquired struggling preppy fashion retailer Jack Wills in a pre-pack administration deal for £12.75m. He once again fought off a rival bid from fellow retail tycoon Philip Day, owner of the Edinburgh Woollen Mill group, who had also tried to buy House of Fraser.