Retail

Mike Ashley says he aims to keep 47 House of Fraser stores open


Mike Ashley is hoping to keep 47 out of 59 House of Fraser stores open, partly by turning over floors of larger shops to Sports Direct or his Flannels chain, it has emerged.

The Sports Direct boss, who is in discussions with landlords about new rent deals, said he wanted to keep 80% of House of Fraser’s stores open and bring in “cool brands of the moment”.

“We think the biggest and most important thing House of Fraser is missing is luxury brands. We think it will make a big difference,” he told the Sun.

Ashley said that in stores such as the one in Birmingham, whole floors could be turned over to Sports Direct under his strategy for the business which he bought out of administration for £90m on Friday.

Sports Direct is already in discussions with landlords, via advisory firm CBRE, about new rent deals that could mean only 12 closures – far fewer than the 31 planned by House of Fraser’s previous owners.

Among the stores that could be saved is the Oxford Street flagship in London – if the right rental deal can be agreed.

Ashley is running House of Fraser’s stores under licence from the company’s administrator EY so he is free to hand back the keys without penalty on any store he does not want.

He is likely to have up to a year to arrange the reassignment of each lease and decide on the store’s future.

While Ashley, and Sports Direct’s “head of elevation” Michael Murray, the fiance of his daughter Anna, are expected to cut tough deals with landlords in the coming weeks, suppliers are having a much rougher ride.

Sports Direct has written to suppliers, which were due to be paid this week, saying that it would only be paying them for money due after the administration. Suppliers, who are thought to be owed more than £60m, had hoped Ashley would honour their debts in the interests of good ongoing relations.

The £90m paid by Ashley went towards paying House of Fraser’s bondholders and banks, with other creditors not expected to get more than 3p in the pound from administrators.

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One supplier told the Guardian: “It is very, very concerning. Ashley is trading the stores on the back of suppliers’ money. We were hoping he would give us back something.”

Pensioners are also set to lose out under the deal. The House of Fraser pension fund has not been taken on by Ashley and so will be assessed by the industry-funded lifeboat, the Pension Protection Fund.

It is likely to be sold to a specialist insurance fund, but the higher costs involved in that process mean that the House of Fraser fund is likely to be more than £160m in deficit, so that members yet to draw a pension will not get their full benefits.



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