Mike Ashley buys House of Fraser
Friday 10 August 2018
AS MIKE Ashley has a bid for troubled department store House of Fraser accepted, retail expert Dr Gordon Fletcher looks at the possible ramifications for jobs, pensions, the stores and the brand.
Dr Fletcher said: “For a 169 year old retailer with a reputation for stability it has been a fast moving week for House of Fraser. The last 48 hours has seen the future of the brand hang in the balance as decisions in the boardroom have put jobs and pensions in doubt.
“With a £40 million hole in its finances that needed to be filled by the 20th August an urgent solution was required. After rejecting offers from Mike Ashley's Sports Direct and Philip Day's Edinburgh Woollen Mills groups as well as bailout specialist Alteri yesterday, House of Fraser was faced with no other solution and went into administration this morning.
“Now in the hands of its administrators, Mike Ashley has again made an offer to takeover over the retailer, and that offer of £90m has now been accepted.
“While this could be seen as indecision from House of Fraser's board, it makes good business sense for Ashley. In administration, Ashley will be able to choose which parts of House of Fraser he wants and those parts he does not. This almost certainly will leave at least part of the pension fund in the hands of the Pension Protection Fund as well as the continued prospect of job losses but helps to keep the doors open at some House of Fraser locations including the iconic former Kendal’s site on Deansgate, Manchester. That is in a prime location and Ashley seems to want upmarket and inner-city locations.
“A takeover will see House of Fraser become part of a group that includes Sports Direct and 30% of Debenhams. The advantages brought by the warehouses and logistics already managed by this group will be an important key in the recovery of the House of Fraser's fortunes. So House of Fraser may well survive but it might look a bit different under the new regime!”