As resurrections go it was impressive. Seconds after House of Fraser announced that it was going into receivership, Mike Ashley, founder of Sports Direct, stepped in to rescue the ailing department store for the bargain price of £90million. Will he now turn it into the ’Selfridges of Sports’?
“The group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business,” a Sports Direct communique announced, but what next for House of Fraser?
The move leaves the future of 59 HoF stores that were expected to open today unclear, including 31 that had been the market for closure and 17,500 jobs. More than 6,000 jobs had already been set aside to be lost as part of a process which was subject to a now-settled legal challenge with HoF landlords and Chinese firm C banner, which pulled out of a £150m rescue plan less than a fortnight ago.
It also see the retailer still needing to find £40m to pay rent bills to avoid going bust.
Last week, Mike Ashley was planning to implement his rescue plan for HoF, but he faced competition from Phillip Day, owner of The Edinburgh Woollen Mill Group, which owns Peacocks, Jaeger, Jane Norman, Austin Reed, and other high-street retailers.
But it seems once the administrators were in, they saw the sense in Ashley’s plan – not least the fact that he has the cash and, moreover, has the cash to invest in the brand going forward, experts close to the matter reveal.
The move also realises Ashley’s long-term dream to expand his retail empire and add a well-respected High Street name to his portfolio. By rescuing the 169-year-old retailer, in which he has held an 11% stake since 2004, he can do that – but what can Ashley bring to HoF that previous owners can’t?
According to George Lawrie, VP, Principal Analyst at Forrester: “Sports Direct is on the record as wanting to develop into the ‘Selfridges of Sport’ with better-quality products from more premium brands. House of Fraser acquisition fits with Sports Direct’s strategy of competing for more affluent buyers with premium taste. I suppose the move has also to do with a lot of competition at the discount end. When making strategic decision about the future of…