Sports Direct International PLC (LON:SPD) boss Mike Ashley has vowed to keep open the bulk of the 59 House of Fraser stores he bought for £90mln last week, according to media reports, as speculation about merging the business with Debenhams PLC (LON:DEB) also continued.
The FTSE 250-listed firm’s chief executive told the Sun newspaper in an interview published on Tuesday: "In a year's time you can hold my feet to the fire on that."
READ: Harrods of the High Street: Ashley's ambition as Sports Direct grabs House of Fraser for £90mln
The newspaper said Ashley has promised to keep 80% of the chain's stores open and has appointed property experts from CBRE to advise him in negotiations with landlords.
In the interview, the Sports Direct’s boss added that he had told the chain's landlords: "Give us a chance and we will try to keep as many open as we can. We are here to get House of Fraser back to where it once was."
In a statement on Friday, following news of Sports Direct’s cash acquisition of the UK stores and the brand from administrators E&Y, Ashley said: “My ambition is to transform House of Fraser into the Harrods of the High Street."
In the Sun interview today, he continued that theme, saying: “We think the biggest and most important thing House of Fraser is missing is luxury brands.”
READ: Mike Ashley’s end-game uncertain after Sports Direct’s £90mln acquisition of House of Fraser
Sports Direct shares were lower again on Tuesday, down 0.4% at 398.5p at lunchtime as investors continued to worry about Ashley’s strategy for the business, with only small hints being given.
But the comments from Ashley lit a fire again under House of Fraser’s struggling department stores chain rival Debenhams – in which Sport Direct owns a 30% stake.
Neil Wilson, chief market analyst at Markets.com commented: “The indications are that the long-called-for tie-up between Debenhams and HoF is now very much on the cards.”
House of Debenhams argument may be powerful
He said: “As noted last week, a move to effectively consolidate the two troubled department store chains into a single offering looks to be the only viable solution to their problems; combining the operations to reduce overheads and stop competing against each other will prove beneficial. Moreover, heavy investment in one at the expense of the other would seem unlikely.”
“However,” the analyst added, “it will probably all depend on whether Debenhams will agree to such a move. The House of Debenhams argument may be powerful but it might not happen. We may yet see a hostile takeover to create a high street giant with enough heft to survive.”
In early afternoon trading, Debenhams shares were 12.4% higher at 14.33p, having gained 9.5% on Monday.