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Industry questions Ashley's plans for HoF

Industry and property sources have speculated that new owner of House of Fraser, Mike Ashley, will close some branches in the department store group’s portfolio and turn others into Sports Direct fascias.

Ashley bought all 59 HoF stores and stock out of administration today (10 August) for £90m. His plans for the portfolio and the business have not yet been disclosed.

Many sources questioned how the deal would change the face of the high street.

“The question we are all asking ourselves is, ’What he is going to do with the shops?’” said one property source. “Is he going to turn them in to some variant of Sports Direct, and how do landlords feel about a massive Sports Direct as the anchor to many of their shopping centres?”

Another property source added: “I think landlords will be quite worried – and they should be. I expect Ashley has opted to renegotiate leases as part of the [administration] deal.

“He may consider closing existing Sports Direct stores. Why pay two rents when you have a bigger, more adaptable store to choose from? He now has development opportunities – he might do a hotel scheme, for example.”

One source close to the situation said: “HoF stores that are not converted into big Flannels, USC or Sports Direct stores will be given back to landlords, or only part of the floor will be traded, and offices will be developed above.”

One property source said: “I think he’s been an opportunist, and it will be interesting to see what he does with all the stores, if he keeps them.

“Big department stores’ rents tend to be lower [per sq ft], so even if you didn’t occupy the whole store it’s a cheaper route into locations such as Oxford Street or the big shopping centres, where the landlords might be a bit more controlling about what can be put in stores.”

He added that the deal brings Ashley a step closer to his ambition of becoming a more premium retailer: “Ashley is now at the top table in terms of respectability. He has said in the past that wants to create a ‘Selfridges of sport’.

“Landlords may be nervous about taking on Sports Direct, but under his strategy Flannels has been doing very well. Maybe this is the next step, where he is determined to be seen as a great retailer – not one who is looking to just discount everything.”

 

Readers' comments (2)

  • Will be interesting to see full extent of liabilities when SOA is revealed, will be some big amounts owed to some suppliers!

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  • Suppliers only have themselves to blame here - they knew what was coming and been burnt.

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