Mike Ashley’s pre-pack acquisitions have cost 6000 jobs & over £1bn in unpaid bills

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Sports Direct AGM

Mike Ashley’s spate of acquisitions of financially distressed retailers has cost the high street over 6000 jobs and over £1 billion in unpaid bills.

According to analysis from The Sunday Times, the Sports Direct tycoon’s method of buying up retailers in pre-pack administration deals, which means he can acquire the assets but not the debt, has come at a cost.

On the flipside, he has saved companies from complete collapse and job cuts were stemmed as a result.

The latest addition to Ashley’s expanding retail empire came last week as he bought Evans Cycles out of administration, before announcing 50 per cent of its stores would shut, leading to 650 potential job losses.

Months earlier, Ashley bought embattled department store House of Fraser out of administration for £90 million.

Although Ashley pledged to more than half the amount of store closures planned, reducing the number from 31 of its total 59 stores to around 12, around 2300 job losses are still anticipated and House of Fraser’s significant debt pile will remain unpaid.

Last year, lingerie retailer Agent Provocateur was purchased by Ashley out of administration when it reportedly employed around 600 staff.

According to Companies House, the retailer employed just 153 workers by the end of last year.

Further acquisitions of sportswear brand USC, clothing brand Firetrap, and retailer JJB Sports over the past decade have also led to nearly 2500 job cuts.

It has been widely speculated that Ashley could be considering a similar takeover of Debenhams, which posted its worst set of results in its 240-year history last month, having already amassed a near-30 per cent stake in the retailer.

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15 COMMENTS

  1. I’m confused as to what the purpose of this piece is? Is it to bash Ashley for purchasing businesses without accountability for the debt and job losses, or to highlight an issue with the way businesses can be phoenixed?

    In business there is risk. Companies that benefit from trading with these brands for many years, also need to anticipate that they can be caught with their pants down one day, and be out substantial sums of money.

    The onus is on suppliers to properly review the credit they extend to their customers and quit whining when things go wrong.

  2. I would say its too highlight that Ashley isn’t the white knight of the high street that some like to potray and in fact he is quiet the opposite

  3. I agree 100%. Mike Ashley is not the bad guy here. This could be a positive- he has saved jobs that would have gone along with retailers that are big names on the high street. He has a ‘winning formula’ and is wise and flexible enough to work within the law to salvage businesses that were too slow to change

    • Yes, Cashley certainly has a winning formula. Look at his ownership of Newcastle United and the Premier League table, with Newcastle flying high. He certainly knows what he’s doing, Mr Cashley.

  4. Is it it Ashley who has “cost” the high street these job losses, or the poor management of the companies prior to their purchase? I suspect Ashley would argue his intervention has actually saved the jobs of those who remain.
    I would far more interested in a review of those credit insurers that withdraw the insurance umbrella in advance of potential rainfall, often advancing the very storms that result in the job losses.

  5. Isn’t Mike Ashley just an old fashioned asset stripper? It has probably been known by everyone all along and if you go back in time to Lillywhite’s in Piccadilly, London it was a great store until Mr Ashley acquired the business. Within weeks it had pile it high sportswear displays and the grosse signs that prevail in every Sports Direct today. So nothing has really changed except, perhaps Mr Ashley’s increased personal wealth.

  6. Tens of thousands of jobs have been saved, Its not as if he sold a company with an accountancy firms approval of “going concern” for a quid that turned out to be lies to an inept randomer who thought he could cream more off the top till it went bust a year later.

    I actually don’t want Ashley to buy Debenhams though. The owners of the last 20 years have over expanded it, filled it with concessions and under-invested in the home brands or online…. resulting in its current state.

    Debenhams needs to shut about 100 stores but the best way would be to spin them off to a subsidiary company then sell it off or put it into administration for someone else to take. Totally distancing them from the Debenhams name.

  7. Is the author of this rubbish ignorant or evil? Mr Ashley didn’t cost those jobs. It’s abhorrent that this is allowed to be published. Get a grip of yourself.

  8. This is a simple ‘Ash’ Bash’
    The man has saved the High St from losing some of our best known brands and in some cases has been able to improve.

    I note that we are not bashing Sir Phil Green for selling a retailer for almost nothing and watching it spin out of business.

    Ashley is taking the risk here, I don’t see a queue of other retailers queuing up to buy ailing retailers! The first things to be cut in retailers are the staff, followed by the rents and then the stock ranges — they are the basics and it is sad that staff lose their jobs, however as one retailer contracts another expands and the jobs are replaced in most cases.

    The question is however; is there really a need for department stores?

  9. Clearly this Mr Ben Steven’s has no clue about what he is talking about … why not report what he has saved and the thousands who actually work for him !! Clearly a person just following orders and no actual opinion for him self …

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