Mike Ashley is set to close all of his stores in Intu Properties PLC (LON:INTU) shopping centres, as the fallout from the landlord’s refusal to reduce rents on four House of Fraser sites rumbles on.
Billionaire Ashley managed to renegotiate the leases for 20 of the department stores and keep them open after buying the collapsed chain in August.
READ: Ashley blames "greedy landlords" as he threatens to close HoF stores
At the time, he thanked those landlords who he said had helped rescue 3,500 jobs but attacked others who did not agree to his proposed terms, calling them “greedy”.
One of those with whom Ashley failed to reach agreement was Intu, and the 54-year-old has retaliated by saying he will shut 17 stores – a mix of Sports Direct International Group PLC (LON:SPD), Flannels, USC and Evans Cycles Outlets – at the landlord’s shopping centres.
Speaking to The Sunday Times, Ashley said: “Intu has demonstrated it is unwilling to help retailers save stores and jobs.
“It is unrealistic for Intu to continue to enjoy a long-term relationship with our retail businesses.”
The plan is to close the shops when leases reach a break clause or expire, and Ashley is reportedly confident that he can get out of all the Intu agreements after 18 months on average.
‘Saviour of UK high street’
The move is reflective of Ashley’s clout in the UK retail sector. As well as the brands above which he owns outright, he also holds stakes in Debenhams PLC (LON:DEB), French Connection Group PLC (LON:FCCN) and Game Digital PLC (LON:GMD).
According to The Times, the decision to shut the 17 stores will cost Intu more than £25mln a year in lost rent and service charges.
That is hardly immaterial either, representing more than 5% of the group’s annual rental income, which came in at £460mln last year.
Intu is understood to dispute that figure, though. Sources close to the company believe the amount lost in rent would be closer to £5mln a year, although bosses are yet to receive any official correspondence from Ashley or his team.
Even if he does follow through with his threats, the landlord reportedly only expects 15 stores to be closed down.
Intu shares were down 1.2% to 188.2p in early afternoon trading on Monday.