Is it the case that the High Street has a new hero, albeit an unlikely one?
Step forward Mike Ashley, the much-derided boss of Sports Direct and Newcastle United, who is better known for his alleged loutish behaviour than a saviour.
In a last-minute tussle, the Sports Direct owner beat rival Philip Day of Edinburgh Woollen Mills to rescue House of Fraser from the teeth of collapse and save 16,000 jobs.
Only four years ago HoF was bought by Nanjing Cenbest, part of China’s Sanpower, for £480m, and its future seemed secure.
Ashley, who already owned 11 per cent of the department store group, is paying £90m to buy all 59 stores, the brand and all the stock.
More importantly, all the staff – 6,000 working in the shops and another 10,000 employed by the concessions – have had their contracts transferred to Sports Direct and will continue to be paid.
It’s a better offer than anyone thought a bidder would make for the business, which is technically bust and went into administration yesterday.
What’s not known – and being argued about – is whether Ashley purposely waited until HoF went into administration before making his final offer, as that meant he did not have to take responsibility for its pension scheme, which is in surplus.
“It’s clear Ashley has been stung by the media drubbing he received over the allegedly ‘Victorian-style’ practices at his warehouses, and payments to family members.”
It’s a tricky one to judge. You can’t blame Ashley for not wanting to take on the pension responsibilities, having watched his great friend, Sir Philip Green, being pilloried over BHS pensions.
If it came down to a choice between saving 16,000 jobs, and not taking on pensions, the administrators made the right call.
They know how tough life is on the High Street. Like most retailers, HoF has suffered fierce competition from new online retailers, higher rates and wages.
But it’s also been appallingly managed and financed for years, going right back to when it was owned by the Fayeds. Only four years ago HoF was bought by Nanjing Cenbest, part of China’s Sanpower, for £480m, and its future seemed secure.
Can Ashley do better? Probably.
Whatever you think of his questionable management style, he’s created a highly successful 750-strong chain and has a brilliant eye for knowing what youngsters want from brands.
For now, he wants to keep all 59 stores, including the 31 due to shut. Some will be turned into Sports Direct shops and others into his Flannels designer chain.
If Mike Ashley wants to turn some House of Fraser stores into the ‘Selfridges of sport’, then why didn’t he do that with Lillywhites? asks Maggie Pagano.
He also has designs on transforming some stores – many in prime city centre locations – either the ‘Selfridges of sport’, or ‘Harrods of the High Street’. Or both. It’s the reason he’s been chasing HoF and Debenhams, in which he has a 29.7 per cent stake, for years.
If he’s to be believed, then it seems odd that he has allowed the once-great Lillywhites emporium on Piccadilly to be pervaded by the ghastly rubbery smells that knock you out in his Sports Direct shops.
Maybe he needs the range of HoF stores to give him scale and buying power? We will soon see. Hopefully, he will take the stores vertically upmarket and behave honourably to staff and suppliers.
It’s clear Ashley has been stung by the media drubbing he received over the allegedly ‘Victorian-style’ practices at his warehouses, and payments to family members. He did not pay himself a salary last year, has taken on criticism, and so has the board.
This was noticeable in the annual report last week, when chairman, Keith Hellawell, said Sports Direct has been hailed as one of the UK’s biggest improvers in terms of reputation.
He added there was no room for complacency in improving working practices and that, despite Ashley being portrayed as a ‘pantomime villain’, he was now on a ‘path to transformation for the benefit of all’.
Miracles can happen. Ashley would do well to remember what happened to the last king of the High Street.
ALEX BRUMMER IS AWAY