Say what you want about Mike Ashley, but he knows a thing or two about running a retail empire. While scores of other high street stalwarts have slipped and struggled in some of the toughest trading conditions of the last decade - and despite swirling scandals over working conditions at its warehouses - Sports Direct has continued to be profitable, to grow revenues and to be cash positive. Sufficiently cash positive, clearly, to buy department store House of Fraser outright for £90m.
The idea of getting into bed with Ashley may be enough to make House of Fraser’s upmarket customers blush, but it won’t surprise anyone familiar with his investments over recent years. The House of Fraser purchase has all the hallmarks of a classic Mike Ashley move: it’s a retailer with a broad footprint and a strong potential for crossovers with his existing brands.
Most importantly, it’s going cheap. In 2014, remember, Chinese firm Sanpower paid £480m for 89% of the firm.
It’s unclear as yet what Ashley’s ‘rescue’ plan will entail. Restoring House of Fraser to its former glory? Taking it downmarket, a la Lillywhites? A pic’n’mix, where Sports Direct takes the assets it likes and sells off the rest? Whatever the plan, he’s clearly confident enough for it to be worth the risk of taking the firm on.
Not all of Ashley’s punts have paid off – his foray into football in particular, looks to have been a costly distraction – but it would seem unwise to write off his chances of success here. Love him or hate him, Mike Ashley is one of the UK’s most successful entrepreneurs for a reason, and when it comes to high street sales and spotting a bargain, he rather knows what he’s doing.
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