How much retail would Mike Ashley own if he bought HMV?

Mike Ashley, the billionaire founder of Sports Direct, could be in charge of more than 30m sq ft of UK retail space if he buys troubled music chain HMV. This is the equivalent to nearly 400 times the size of the football pitch at St James’ Park, home of Ashley’s Newcastle United FC. Figures from Radius Data Exchange reveal that Ashley’s already sprawling retail empire would grow by 2.3% to cover 1,255 shops, if he took over HMV and its Fopp brand. This would account for a staggering 2.5% of all stores leased in the UK, based on Experian estimates that the UK has 1.2bn sq ft of retail space. High stakes Ashley’s numerous business interests in retail include fashion retailers Flannels, USC and Agent Provocateur. He also has major shareholdings in Debenhams, French Connection and Game Digital. In August he bought House of Fraser out of administration for £90m, and two months later rescued bike retailer Evans Cycles in a pre-pack deal. His name is now mentioned in connection with a potential takeover bid for nearly any retailer facing insolvency woes. HMV could have a productive place in Ashley’s stable, given his stake in Game. But store closures appear to be inevitable, in the face of waning demand for physical product in entertainment retailing. James Child, retail analyst at EG, said: “Ashley’s possible move for HMV could make sense. Streamlining entertainment retail into his growing department store portfolio could increase the value of the offer, though it would probably see many of the HMV stores shuttered. “Ashley could look to consolidate the HMV offer with the Game brand which he already has a stake in, possibly looking to take advantage of the popular growth in gaming venues.” Fickle friend Ashley has taken advantage of several buying opportunities, at an extremely turbulent time for bricks-and-mortar retail. It remains to be seen whether his strategy will save the high street, or foster unease over his growing control. Despite his overtures towards a growing number of businesses, Ashley continues to be well regarded in the property industry, which appears to remain largely unruffled by his increasing possession of retail space. One senior source at a landlord said: “He is an exceptionally talented businessman. He has been very straight with us, in all our recent dealings with him.” However, Ashley’s tendency to make quick decisions signals a level of unpredictability that landlords must steel themselves against. Ashley’s recent dealings with beleaguered shopping centre landlord intu is a good example. After negotiations on lease terms at the REIT’s four House of Fraser stores went south late last year, Ashley outlined intentions to close around 17 stores across his brands – including Sports Direct, Flannels and Evans Cycles – at its centres early this year. This week, however, he has backtracked and is planning to keep all four intu House of Fraser stores trading – for now, at least. “He is a quick decision maker,” said the source. “After a bad meeting, some might be able to assume with some organisations that [store closures would be limited to those discussed], but not with him.” Other stores undergoing swift U-turns after being slated for closure include the Kendals flagship in Manchester and Swindon’s House of Fraser at the Brunel Shopping Centre. Ed Cooke, chief executive of retail property organisation Revo, said that, like other retailers, Ashley must ensure his store estate gains the appropriate investment in order for his business interests to succeed, even “in a world where digital retail sales are growing proportionately”. “The more fascias he owns, the more bargaining power he has,” said Cooke. “But the need for him to collaborate with owners is even more crucial.” Main image © Peter Macdiarmid/Rex/Shutterstock To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette