‘Green shoots of recovery’ at House of Fraser but Ashley warns of store closures
Sport Direct is ‘starting to see the green shoots of recovery,’ at House of Fraser, according to the group’s chairman David Daly.
‘We are bringing new disciplines, experience and skills to bear which is helping the turnaround. Our Frasers strategy is to create a superior shopping experience for the consumer which will be led by the original Frasers. In the coming months and years, Frasers will prove to be a vital and successful part of the group,’ he says.
However, Mike Ashley, Sport Direct chief executive was warned that some stores will close as even without paying rent they are unprofitable.
‘During this calendar year we have been integrating House of Fraser into the Sports Direct Group and it is safe to say an awful lot of work has been done by many people of all levels to bring what was - due to the deliberate incompetence of previous management and ownership - an unmitigated disaster into a functioning state. We now have the support services including IT, warehouse and logistics fully integrated and hope that this is a solid base to build on. The management, buying, retailing, financial and other departments and functions are integrated and aligned with the rest of the group and running as one business. I want to thank everybody within the Sports Direct Group, including our new House of Fraser colleagues, for making this happen in very difficult circumstances.
‘A lot has been made about my comments regarding the "terminal" nature of House of Frasers problems. For absolute clarity, as shown by the fact House of Fraser went into administration and indeed was mere hours from liquidation such was its parlous state, the business was dead, finished, destroyed. It was, and it is only through the incredible efforts of those within the Sports Direct Group, including the remaining House of Fraser teams, that we are tackling these problems and trying to build a business with a future, a future for Frasers that is hopefully "bright".
‘To repeat, the terminal issues included serious under investment in stores and appropriate support services, excessive and unsustainable outsourcing and financing, senior team extravagances, the fairy tales around the sustainability of the business told to stakeholders including suppliers and the fraudulent appearance of selling off brands to the Chinese parent shortly before administration.
‘I reiterate, we are doing as much as we can to realistically save as many jobs and stores as possible however, despite our best efforts, there are still a number of stores which are currently paying zero rent and that are unprofitable and thus not sustainable. We are continuing to review the longer-term portfolio and would expect the number of retained stores to continue to reduce in the next 12 months.’