House of Fraser calls in administrators as rescue talks fail

Sports Direct boss Mike Ashley bought the House of Fraser department store chain after it went into administration. EPA

Sports Direct boss Mike Ashley bought the House of Fraser department store chain after it went into administration. EPA

Since then, it has been revealed that Mike Ashley's Sports Direct has struck a deal to rescue House of Fraser out of administration for £90 million, raising hopes for the future of thousands of staff.

Sports Direct's shares were down 0.7 percent at 1445 GMT.

Sports Direct says it has bought all of the United Kingdom stores, its brand and all its stock.

The Leamington branch of the ailing company is one of 31 of its 59 stores earmarked for closure under the previous owners.

This nearly certainly will leave at least part of the pension fund in the hands of the Pension Protection Fund as well as the continued prospect of job losses but helps to keep the doors open at some House of Fraser locations including the iconic former Kendal's site on Deansgate, Manchester.

Mid-market retailers like House of Fraser have been hit particularly hard, with rivals Debenhams Plc and Marks & Spencer Group Plc shrinking store space as their online businesses have been slow to take off.

By allowing the store chain to go into administration for a few hours before getting out his chequebook, Mr Ashley appears to get the assets shorn of tiresome liabilities like pension promises, lease commitments and exposures to other creditors.

At the time the department store chain said discussions between interested investors and its main creditors had not concluded in a "solvent solution" and it had no choice but to appoint administrators.

"The proposed administrators have confirmed that the business will continue trading, including all stores and offices, while they seek to complete a sale". Stores were delaying opening until 11am, however.

House of Fraser chief executive Alex Williamson had this morning spoken of his confidence that the company's future would be secured in short order, saying "an acquisition of the 169-year-old retail business will see House of Fraser regain stability, certainty and financial strength".

Frank Slevin, chairman of House of Fraser, said: "This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround plan".

"We will do our best to keep as many stores open as possible", Ashley said in a statement, making no mention of his plans for the workforce - over 5,900 direct employees and 10,100 who work for concession partners.

However, a rescue deal by a well-capitalised business like Sports Direct will at least preserve a significant number of jobs at HoF.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.