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Exclusive: Mike Ashley sets sights on string of 2013 deals

Face of UK fashion retail set to change as Mike Ashley makes a play for House of Fraser and looks to consolidate position with further acquisitions.

Sports Direct owner Mike Ashley is thought to be poised for a spending spree that could see him further dominate the UK fashion retail scene.

Top of the list is House of Fraser, with Ashley understood to be in the process of buying its chairman, Don McCarthy, out of the business.

The move is believed to be part of a deal that will result in Ashley becoming a majority shareholder.

McCarthy last week sold his interest in Aurum, the owner of jewellery business Goldsmiths, and sources indicated he was also looking to take a step back from House of Fraser. Ashley, meanwhile, is understood to be looking to widen his retail presence.

Selling up? Chairman Don McCarthy is thought to be offloading his stake in HoF

Selling up? Chairman Don McCarthy is thought to be offloading his stake in HoF

“Don wants out,” one source close to the situation said. “HoF has a portfolio with several stores that don’t contribute anything. Don’s view is that Mike can convert the unprofitable stores into Sports Direct and focus on growing the top-performing stores into a premium retail business.”

Another source suggested House of Fraser would offer a higher-end platform for key brands acquired by Ashley.

As well as McCarthy’s 19.4% stake, Ashley is also thought to be in the process of acquiring either one or both of the respective stakes held by BG Holding (35%) and FL Holding (13.9%), divisions of the collapsed Icelandic banks Baugur and Landsbanki.

Other shareholders include TBH Trading, an investment vehicle of retail entrepreneur Sir Tom Hunter, which owns an 11.1% stake. Karen Millen co-founder Kevin Stanford owns 10%, with the remainder split between several smaller shareholders.

The deal is now thought to be in front of these parties. This follows the issue of new articles of association of Highland Group Holdings, the parent company of House of Fraser, which were adopted on November 9 and are believed to make it easier to transfer shares. 

Last week, HoF revealed like-for-like sales for the third quarter had risen 5.4%, posting a healthy EBITDA of £3m compared with a loss of £1.3m over the same period last year.

The business also managed to reduce its debt from £280m on October 29, 2011, to £274.8m on October 27, 2012.

Away from House of Fraser, Drapers understands that Sports Direct has held meetings with rival business JD Sports Fashion to discuss potentially swapping certain businesses and brands.

Premium indie mini-chains Flannels and Cruise have been identified as top interests for JD, with Sports Direct eyeing up rugby brand KooGa.

One source said: “The most unusual thing is that the two companies are meeting in the first place, as historically there is such rivalry between the two. But it makes sense because Sports Direct are weak on the rugby side.”

Another industry source added: “[Ashley] has always wanted a rugby brand because it is the one thing he doesn’t have – he has football and cricket, but he doesn’t have rugby.”

Sports Direct is also thought to have won the menswear licence for premium label DKNY – a move that Drapers first revealed was on the cards back in October.

Rumours have also surfaced that Ashley is eyeing menswear chain Burton, although this has been denied by parent company Arcadia.

Readers' comments (7)

  • If I were a brand in HOF, I would be concerned, very concerned. Ashley will be a disaster for HOF, no question. Too much money and power, not enough class. I would severely question his suitability given his track record.

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  • Mike Cashley strikes again! With JD and Sports Direct having stakes in so many brands and retailers alike, at some point competition will dry up and the mainstream young fashion market will die a slow and painful wholesale death

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  • Insane. It's all well and good buying up floundering, bottom market tat brands but HoF is a completely different kettle of fish and I don't think Ashley's approach is suited to anything other than afformentioned tat.

    An inherent problem, especially for Ashley and his bullish personality, will be that HoF relies heavily on a number of key brands, Ralph Lauren, Superdry, Hugo Boss etc. that will no doubt be at odds with the way he runs his businesses ("What do you mean I can't sell your shirts at 40% off all year round?!"). I would expect to see a number of these brands either be kicked out/pull of of HoF if this deal goes ahead and the sad thing is that HoF needs them more than they need HoF.

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  • Mike Cashley is basically killing Brands, the High Street and soon enough all Indies will be non existant. How can they compete with the power and cash of this guy.

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  • The young fashion market for indies is in a state of decline. The high street is much faster at breaking trends (at a price) than the brands are - just look at the success of Topman, River Island and even Primark more recently. The rest of the market is going to be devalued by Ashley and JD. The end result could be a similar situation to the disappearance of the sports indies on the high street.

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  • --------------------------------------------------------------------------
    ''Mike Ashley is basically killing Brands, the High Street and soon enough all Indies will be non existant. How can they compete with the power and cash of this guy.''
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    Of course they can compete..there will always be a niche, independent market for new, niche independent brands (not clone ones but real ones with new ideas).....M Ashely is in the mainstream and when he buys something up and canes it out ........well....maybe it was it's 'time' to be rinsed out? He just trades on a different layer of the market to others....grumbling about his methods and business is a waste of energy...move on.

    The exciting stuff for the young market is mainly online now...it's where they hang out and where they find new ideas and products...and not on the big sites (like asos)....it's all a bit more sub culture than that.

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  • what a disaster, sports direct already known as the Primark of sports shops, soon will be wading through rails everywhere in House of Fraser with all its big brands with the supposed 70% off, when is this all going to end, the high streets are being ruined by this man, come on Mary Portas your job was to save the high street, lets see some action.

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