Mike Ashley’s Sports Direct will attempt to keep as many House of Fraser stores open as possible following a £90 million rescue of the ailing retailer earlier today.
Sports Direct struck a deal to buy the firm out of administration earlier on Friday.
In a stock market announcement, Sports Direct said it has acquired all 59 House of Fraser stores, the brand and all of the retailer’s stock.
Some 17,000 staff have been informed that they will be transferred over from House of Fraser to Sports Direct.The biggest crisis on the High Street for ten years could see one of Manchester’s most iconic stores shut its door after House of Fraser announced this morning that it was calling in the administrators.
The troubled chain announced back in June the closure of 31 of its outlets across the country in a move that will effect the jobs of around six thousand people but its flagship Deansgate store in Manchester will remain open after the Chinese owned business announced that it had filed in the court proposals for Company Voluntary Arrangements.
Since then C.banner, which owns the toy store Hamley’s, who had planned to take control of the struggling department store chain and inject £70m of cash said it would no longer proceed with its investment throwing the deal to keep the existing stores open.
Earlier in a statement, it said that talks with investors and creditors had “not concluded in a solvent solution” adding that
“Significant progress has been made towards completing a sale of the group’s business and assets.The proposed administrators are expected to continue to progress those discussions with a view to concluding a transaction shortly after their appointment.”
Sofie Willmott, Senior Retail Analyst at GlobalData, a leading data and analytics company, offers her view on the chain’s current challenges:
‘‘To give House of Fraser the best chance of survival, Sports Direct and its owner Mike Ashley must make drastic changes to both its product proposition and store environment to entice shoppers back. This will require significant investment – something which the chain has been starved of in recent years.
‘‘Mike Ashley could harness his mixed portfolio of retail businesses to transform House of Fraser, combining his more premium fascias Agent Provocateur and Flannels, which sells brands like Burberry London, Fendi and Sophia Webster, to create a more upmarket department store. Although very few of House of Fraser’s own brands remain, those such as Issa and Biba could be incorporated into this new format.
”Given the success of luxury department stores like Selfridges and Harrods, Ashley may attempt to replicate their model using House of Fraser’s locations, however it is questionable whether the high end price points would appeal nationwide, particularly given that London-based department store retailers have benefited from tourism.”