Sports Direct to close more House of Fraser stores

Sports Direct has said it is set to close more House of Fraser stores over the next year, amid some “green shoots” of recovery at the department store chain. In the company’s update for the 26 weeks to 27 October, Mike Ashley said that “an awful lot of work has been done” to integrate the chain into the Sports Direct group, and bring an “unmitigated disaster into a functioning state”. However, Ashley warned that the company expects to trim its store count in the next year. He said: “We are doing as much as we can to realistically save as many jobs and stores as possible. However, despite our best efforts, there are still a number of stores which are currently paying zero rent and that are unprofitable and thus not sustainable. “We are continuing to review the longer-term portfolio and would expect the number of retained stores to continue to reduce in the next 12 months.” Business rates Ashley used the update to heavily criticise politicians and regulators over Debenhams, after his share was wiped out earlier this year – a “debacle” labelled internally at Sports Direct as “Project Serpico” – as well as fraud allegations at Goals Soccer Centres. Jeremy Corbyn was rebuked too, after he “attacked” the business during his election campaign. “He really should have checked his facts as he really was shown to be ‘clueless’,” said Ashley. Business rates also came under fire, which Ashley said is “clearly helping to kill much of what remains of the UK high street”. “I really hope it is not too late already and would urge parliamentarians to expedite reform before it really does become too late,” he said. “The current system is unintelligible to almost everyone but true business rates experts, from the transitional relief to revaluation process and effective dates to base liability multipliers.” For Ashley, downwards phasing “severely punishes” larger stores, which are “in desperate trouble and need help as can be seen from the constant tsunami of retail administrations and CVAs”. Meanwhile, other “crazy offshoots” to current policy, such as property improvements increasing rateable value, deter retailers from investing in their stores. “There are House of Fraser stores paying no rent but still losing money,” he said. “A correction to the business rates would dramatically change the situation insofar as we could see light at the end of the tunnel and this could help save stores. “Just to make it clear, we are not looking for blanket discounts on rates, we are just looking to pay a correct amount, be that at increased or decreased rates.” Shirebrook sale boosts profits The news comes as reported profit before tax across the group grew by 160% to £193.4m in the period to 27 October, on the back of a £84.9m gain from the sale and leaseback of its Shirebrook distribution centre. Group revenue increased by 14% to £2bn, after a 79.2% rise in its premium lifestyle division owing to new Flannels stores and a full period contribution from House of Fraser, while UK sports retail sales were up 6.2%. Underlying Ebitda grew 21.8% to £181.2m, following improved performance in the premium lifestyle and European retail divisions. Net debt was reduced to £254.4m, from £378.5m on 28 April. Earlier this morning, shareholders approved the company’s rebranding from Sports Direct International to Frasers Group. Its stock market ticker will change accordingly, from SPD to FRAS. To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette