Sports Direct has agreed to buy the House of Fraser department store chain for £ 90million. News broke earlier that House of Fraser brought in directors putting more than 17,000 jobs at risk, as the company went into administration after talks between the retailer and its creditors failed to resolve. come to an agreement.
The EY directors were called into the department store chain and House of Fraser issued a statement saying talks with investors and creditors had “not resulted in a solvent solution.”
EY has confirmed that the company will continue to operate, including all stores and offices, while it attempts to close a sale.
All of its 59 stores were scheduled to open as usual on Friday, including the 31 that had already been marked for closure.
House of Fraser began operations 169 years ago and employs 17,500 people, including 11,500 dealership employees.
Sports Direct said in a statement: “The group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the company’s inventory.”
Analysis: Retail expert Dr Gordon Fletcher, University of Salford
For a 169-year-old retailer with a reputation for stability, it’s been a quick week for House of Fraser. For the past 48 hours, the future of the brand has been on the line, with board decisions casting doubts on jobs and pensions.
With a £ 40million hole in its finances due to be closed by August 20, an urgent solution was required. After rejecting offers from the Sports Direct groups of Mike Ashley and Edinburgh Woolen Mills of Philip Day as well as bailout specialist Alteri yesterday, House of Fraser had no other options and went into administration this morning.
Now in the hands of its directors, Mike Ashley has once again made an offer to buy back the retailer, and the £ 90million offer has now been accepted.
While this might be seen as indecision on the part of the House of Fraser board, it does make business sense to Ashley. In administration, Ashley will be able to choose which parts of House of Fraser he wants and which he doesn’t.
This will almost certainly leave at least some of the pension fund in the hands of the Pension Protection Fund as well as the continued prospect of job losses, but helps keep the doors open at some House of Fraser locations, including the iconic former Kendal site on Deansgate. , Manchester. It’s in a prime location and Ashley seems to want upscale and downtown locations.
A takeover will see House of Fraser become part of a group that includes Sports Direct and 30% of Debenhams. The advantages brought by the warehouses and logistics already managed by this group will be an important key in the recovery of the fortunes of Maison Fraser. So House of Fraser may well survive, but it might look a little different under the new regime!