The leading British sportswear retailer Sports Direct will acquire the 169-year-old department-store chain House of Fraser Ltd. for £90 million. The latter went into administration several hours before the deal was announced due to unsuccessful negotiations with creditors.
Sports Direct was established in 1982 by British tycoon Mike Ashley and is currently the United Kingdom’s largest sports-goods retailer operating roughly 670 stores worldwide. Mr. Ashley sees the deal as an opportunity to rescue House of Fraser and extend his portfolio of investments. The billionaire owns English football club Newcastle United and has a minority share in Scottish football club Glasgow Rangers. In addition, he has invested substantially in clothing brands ranging from low-cost offerings like Lonsdale and Everlast to upscale products sold in the retail fashion luxury group Flannels.
“We will do our best to keep as many stores open as possible. This is a massive step forward and further enhances our strategy of elevation across the group. This will benefit both House of Fraser and Flannels in the luxury sector,” said Mr. Ashley.
Earlier this year, House of Fraser made a statement that 31 stores need to be closed, which would result in the loss of 6,000 jobs. Mr. Ashley, who was preciously accused by lawmakers, media, and investors for his poor corporate governance and underpaying employees, might be put under public pressure again. “Staff will undoubtedly be concerned about what the sale means for their wages and conditions,” said the Labour Party’s spokeswoman on business.
