House of Fraser: Sports Direct owner Mike Ashley buys collapsing department store

Mike Ashley‘s Sports Direct has bought department store chain House of Fraser, which collapsed into administration on Friday morning.

The discount sports retailer paid £90m in cash to buy the high street department store chain, which includes all its UK stores, the branding and all of its stock. The House of Fraser store in Dublin was not included in the deal. 

House of Fraser has 59 stores across the UK and Ireland, including 31 already earmarked for closure, and employs 17,500 people.

The group announced in June that it was shutting down a raft of stores, putting 6,000 jobs at risk, after the costs of running its store network had become “unsustainable”.

On Friday, administrators were called in, and reports emerged that Sports Direct founder Mike Ashley, who also owns Newcastle United football club, was close to buying all or part of the retailer.

Michael Mulligan, insolvency specialist at law firm Shakespeare Martineau, said: “Now that Sports Direct has acquired the House of Fraser brand – including all of the stock in the business –  it will allow continued operation with a likely focus on the flagship stores.

“This will be welcome news not only for suppliers who rely on House of Fraser for their livelihoods, but also for all employees involved.”

He added: “This is yet another significant High Street rescue mission and the crisis shows no sign of abating.  With interest rates rising and less money in the pocket of the UK consumer, more household names may be at risk.”

Sports Direct was already an investor in House of Fraser, and is also the biggest shareholder in Debenhams, holding almost 30 per cent of shares in the retailer.

It increased its stake in the store earlier this year, and its portion of the company is now close to the level at which Sports Direct will be forced to mount a takeover bid.

The sporting goods chain recently reported a 73 per cent drop in profits due to the poor performance of Debenhams.

Shares in Sports Direct edged down after the announcement.

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