// Sports Direct eyes more House of Fraser store closures
// As many as two-thirds of the original 59 stores could close, the Financial Times reported
// Sports Direct recently expressed regret over acquiring House of Fraser after the department store booked a loss of £54.6m
Sports Direct is reportedly looking to close down as many House of Fraser stores as the previous management had originally planned to shut.
As many as two-thirds of the original 59 stores could close, the Financial Times reported last Friday, citing an anonymous source close to Sports Direct owner and chief executive Mike Ashley.
When Sports Direct acquired House of Fraser out of administration a year ago, Ashley said he would save as many of its stores as possible.
However, in its recent full-year report – which caught headlines due to the several delays – Sports Direct expressed regret over acquiring House of Fraser after the department store booked an operating loss of £54.6 million on the back of revenues of £330.6 million.
Sports Direct had bought House of Fraser out of administration for £90 million in August last year.
Ashley made no secret of his ambitions to turn the department store chain into “the Harrods of the high street”.
However, he recently conceded that a number of House of Fraser stores which are currently paying zero rent were still unprofitable, and that this was not sustainable.
He also hit out at the department store’s former owners for under investing in the business and for “excessive and unsustainable outsourcing and financing”.
“We have found that [House of Fraser’s] problems are nothing short of terminal in nature,” Ashley said in Sports Direct’s full-year report, which was published in the tail-end of July.
He added: “We are continuing to review the longer-term portfolio and would expect the number of retained stores to reduce in the next 12 months.
“On a scale out of 5, with 1 being very bad and 5 being very good, House of Fraser is a 1, albeit we are trying very hard to turn the business around this will not be quick and it will not be easy.”
As House of Fraser was bought out of administration, its stores are operated under licence from the administrators until new lease deals are agreed.
Many are operating on rolling or short-term leases at low rents while their business performance is evaluated.
Many of these are also one-year agreements and are due to expire this month.
Notable House of Fraser stores that have already shut down include the City branch in London, and at Hull, which shut its doors for the last time over the weekend even though it was initially saved from closure at the end of last year.
News of the store closures come after Sports Direct made a pledge in May to make an investment worth hundreds of millions of pounds into House of Fraser, which includes redeveloping up to 31 stores into the luxury Frasers fascia over the next five years.
However, the source speaking to the Financial Times said Ashley only needed about 15 to 20 refurbished stores trading in the Frasers format.
The Retail Gazette has contacted Sports Direct for comment.