Sports Direct Plans to Keep Most House of Fraser Stores Open

(Bloomberg) -- Sports Direct International Plc says it will continue to operate most of House of Fraser Ltd.’s 59 U.K. and Ireland department stores after rescuing the chain from near collapse.

“Our aim is to keep at least 80 percent of the stores open,” Liam Rowley, Sports Direct’s head of strategic investments, said Tuesday in an interview on Bloomberg TV with Anna Edwards and Manus Cranny. “We feel that we can bring a lot more to the table with our ambition than, maybe, was previously done.”

Sports Direct acquired House of Fraser last week for 90 million pounds ($115 million) after would-be Chinese buyer C.banner International Holdings Ltd. pulled out, prompting the U.K. company to begin insolvency procedures. C.banner had planned to shut more than half of the chain’s department stores.

House of Fraser is the latest near-victim of a crisis that has claimed retailers like BHS, Maplin Electronics and the U.K. arm of Toys “R” Us Inc. British shopkeepers are struggling with a Brexit-fueled spike in sourcing costs, increased staffing outlays and a squeeze on disposable incomes. The steady rise of e-commerce has also opened up bricks-and-mortar stores to new competitors with low overheads.

After buying House of Fraser, Sports Direct Chief Executive Officer Mike Ashley said he wanted to turn the chain into the “Harrods of the high street,” referring to the upmarket London retailer. The sporting-goods seller also holds a stake in Debenhams Plc, another beleaguered British department-store chain.

“Us taking on House of Fraser does not mean we are going to let Debenhams disappear,” Rowley said. “We are very much holding their feet to the fire.”

Debenhams Rises

He declined to comment on speculation that Sports Direct might attempt to combine the two retailers, which lifted Debenhams for a second day. The shares rose as much as 3.8 percent early Tuesday in London, extending a 9.5 percent rally Monday.

“Could there be an acquisition of Debenhams?” Liberum analyst Adam Tomlinson said. “I think that is the question that everyone is asking.”

Rowley said Sports Direct is eager to tap buoyant demand for luxury goods, and that investment will focus on elevating the store experience at House of Fraser. It will play down private-label goods in favor of better-known brands, he added.

“The luxury market is on fire at the moment,” Rowley said. “We need to bring in brands that people want. If you get the right gear in the store, people will come to the store.”

©2018 Bloomberg L.P.