Business

Ashley vows to turn House of Fraser into 'Harrods of the high street'

House of Fraser at Victoria Square is among those within the retail giant which have gone into administration

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.

The tracksuit tycoon struck a deal on Friday to buy the firm out of administration, raising hopes for the future of thousands of staff.

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, including its Belfast outlet at Victoria Square.

But the ongoing uncertainty over the company has prompted the Northern Ireland Retail Consortium to urge government intervention, including appointing a retail ministerial lead or at least a retail strategy for the region.

NIRC director Aodhán Connolly said: "This is a critical period for the retail industry, caused by a perfect storm of pressures including rising costs and new technology changing how people shop.

“How much more news like this will it take before we have action to support retailers by cutting the inequitable and antiquated business rates bill?

"Our rates system needs a complete overhaul not piecemeal tweaks but yet we can't even get the slightest of changes made without a minister.

"We have had enough talk of supporting our industry, now we need action.

"Our industry needs government support to effect retail reinvention and prevent retail Armageddon."

He added: "We need forward thinking to make sure our consumers spend their time as well as their money in our towns and cities. If we don't have a lead official on retail and an NI retail strategy, we will fall behind our neighbours to the south and east.”

Some 17,000 staff have been informed that they will be transferred over from House of Fraser to Sports Direct.

But doubt remains over the long-term future of jobs and whether Mr Ashley will shut under-performing stores as part of a restructuring programme.

The billionaire, who also owns Newcastle United, said that Sports Direct will "do our best to keep as many stores open as possible".

He added: "My ambition is to transform House of Fraser into the Harrods of the high street."

Mr Ashley's deal was struck through a pre-pack administration process, where a company is put into administration before a new buyer cherry-picks the best assets.

The tycoon beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.

It is understood that Mr Day's proposal was in excess of £100 million, would have avoided an administration and included House of Fraser's pension scheme.

However, accountancy giant EY, which was overseeing the process, opted for Mr Ashley's offer.

The Sports Direct chief added: "This is a massive step forward and further enhances our strategy of elevation across the group.

"This will benefit both House of Fraser and Flannels in the luxury sector.

"It is vital that we restore the right level of ongoing relationships with the luxury brands. Our deal was conservative, consistent and simple."

Sources said that Mr Ashley will now begin the process of turning some House of Fraser stores into Sports Direct outlets and rebrand others under the Flannels fascia.

Prior to its collapse, Mr Ashley had held an 11 per cent stake in the department store chain.

The deal will see the tycoon tighten his grip over the British high street, adding to his sports retailing and "premium fashion" empire.

The billionaire has also built up stakes in rivals such as Debenhams, Goals Soccer Centres and French Connection.

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