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House of Fraser suppliers: ‘Enough is enough’

Several House of Fraser suppliers have hit out at the retailer’s pre-pack administration and subsequent sale to Sports Direct, fearing that they will once again be left to pick up the bill.

Mike Ashley’s Sports Direct bought House of Fraser out of administration today (10 August) for £90m after months of speculation over the future of the struggling department store chain. Administrators from EY had been appointed hours earlier.

HoF’s pension scheme has been described as “strong and well funded” by several sources and is thought to have a surplus of around £20m.

Many suppliers have told Drapers they have had no contact from House of Fraser, its administrator EY or Sports Direct yet and are growing increasingly worried over payments due next week. HoF creditors – including suppliers and landlords – are thought to be owed around £75m.

A spokesman for EY said: ”There will be a shortfall to the secured creditors which means the prescribed part [under the Insolvency Act] will apply. The maximum prescribed part amount that can accumulate under the insolvency legislation is £600,000 in any one company. The amount that is within the prescribed part is available to be distributed among all the unsecured creditors.” 

“This is going to hurt a lot of businesses,” said one supplier. “Ashley has no legal obligation to pay what’s owed but it is going to cause a tsunami of other businesses going under in the coming months if [Sports Direct] doesn’t pay it. Enough is enough, suppliers can’t take the hit any more. We have had no communication from House of Fraser so we are all wondering what’s going on.”

One menswear supplier agreed: “It’s a very sad day and there are going to be a lot of casualties as a result of this. It is a crying shame that it is in this position. It had the support of suppliers and [management] had promised so much.

“Payment is due [on 15 August] so a lot of suppliers are worried about what’s going to happen. It is the last branded house on the high street, so many brands could be badly hit [by the administration].”

Another supplier said: “We have made small amounts of the autumn delivery. Do I want to ship a lot next week? No. We want to sit on our hands and wait to get more details. I will not be surprised if others do the same.”

One womenswear concession holder said: “[As it’s a pre-pack administration] we will not get paid June and July commission, which is a big number. So ideally, we can enter into a deal with Sports Direct to stay on in selected sites but only if they guarantee we will get paid. If not, we will likely pull out.”

Sports Direct bought all 59 stores and all of the stock in the business. However, many suppliers speculated about whether Ashley will keep all stores open. The next quarterly rent date is 29 September.

One supplier said: “I suspect Ashley will close some of the stores and change some of the remaining HoF shops to Sports Direct Group fascias. [Suppliers] have no idea if we are getting paid or not, it is a big worry.”

One concession holder said: “The big question is how many stores will Ashley keep and how will he run them? So much is up in the air. It is a sorry saga.”

However, he added that there was still a future for the business: “With investment there is still an opportunity for HoF, it is the beginning of a new chapter.”

Another supplier was also positive: “It is ideal for Sports Direct, which can now hone in on that massive demand for athleisure, in-store gyms with personal trainers and the successful mid-to-high end fashion brands from Flannels data. Footfall [at HoF] is around 30% less than Debenhams, so with a fresh new approach and USP it could be ahead in 12 months. I’ve had the pleasure of dealing with House of Fraser for 20 years and it’s clear what it requires. I’m positive Sports Direct can deliver.”

Drapers has contacted House of Fraser and Sports Direct for comment.

Readers' comments (4)

  • Why are brands so shocked? They knew - or should have known - that the store was in trouble for ages and it was only a matter of time before they went into administration. I'm sure their management have bluntly lied to brands saying things were ok when they clearly were not but come on, we all knew they were in the brown stuff long ago.

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  • When retailers are gone into administration, it is supplier who get most damaged. I used to be BHS's garment supplier for 20 years. Until last minutes, buyers and directors have been lied to me and assured that everything is OK and not to worry. Then, next day, BHS went to administration. I had to let all my team staffs go and I myself had to close the business to take responsibility for 1.2 Million loss which was unpaid by BHS. Therefore, I think that there should be law enforced if directors and buyers not tell the truth to the supplier and persuade to keep supplying until last minutes for their own company's benefit. They know the end result but just wanted to have extra time, nothing else. A lot of buyers/directors claimed that they did not know either but they were just acting on behalf of the retailer for their own sake and not to care about supplier's damage and then simply walked away receiving their money package. I feel so sorry for the supplier for HOF, because I know that their loyalty has been abused by HOF until the end and betrayed

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  • Jigsaw pulled out of numerous HoF’s Since Friday. Office refusing to sell from their concessions.

    Do the right thing Sports Direct...treat your new partners the way you would like to be treated.

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  • From the 75 million owed much of this is for the concession suppliers, whom were meant to be paid on the 15th August, and Sports Direct will not need most of these concessions any longer so the fall out of this could be devastating for these companies and their loyal staff.

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