Harrods of the High Street? I wish I hadn’t bought House of Fraser admits Ashley, as he reveals the chain is in ‘terminal decline’
- The billionaire boss snapped up House of Fraser in August last year
- Now though he said the chain was a ‘one out of five, with one being very bad’
- He said in hindsight ‘We might have made a different decision in August 2018’
- Ashley also lashed out at House of Fraser’s former chairman Frank Slevin
- In the update issued late last night the outlook seemed bleak, with Ashley predicting the closure of more shops, saying the problems were ‘terminal’
Mike Ashley last night admitted buying House Of Fraser was a mistake as he revealed the department store chain was in terminal decline.
The billionaire Sports Direct boss snapped up House Of Fraser for £90m in August last year and promised to turn it into the ‘Harrods of the High Street’.
But in an extraordinary tirade alongside a delayed set of results, the 54-year-old said: ‘On a scale out of five, with one being very bad and five being very good, House Of Fraser is a one.
Mike Ashley bought House of Fraser for £90m last August, but now says with the benefit of hindsight he might not have snapped up the struggling department store chain
‘If we had the gift of hindsight we might have made a different decision in August 2018.’
Warning that further job cuts were on the way at House Of Fraser as he closes unprofitable stores, Ashley turned his fire on the chain’s former chairman Frank Slevin.
Declaring that he ‘exemplified City greed and excess’, Ashley said Slevin ‘thought it suitable to retain these extravagances not appropriate to a business in its death spiral’.
The comments came as:
– Sports Direct chief financial officer Jon Kempster quit following a day of delays to the company’s results;
– It scrapped all profit guidance following a lower than expected 5pc rise in profits to £143.3m last year;
– Belgium hit Sports Direct with a £605m tax bill;
– Ashley said the administration of Debenhams could have been avoided if he had been made chief executive, as he had requested, and that the department store’s advisers should be fined and jailed;
– He lashed out at the running of Goals Soccer Centre, where Sports Direct has a near-19pc stake;
– Called on the Government to enforce a tax on online retailers and overhaul the ‘antiquated’ business rates system.
– Sports Direct took its stake in Game Digital up to 86pc.
Footsie bosses need drug testing, says Ashley:
The bosses of all listed companies should undergo drug tests, Mike Ashley claimed last night.
In a bizarre tirade, the Sports Direct boss said the tests would ensure chief executives and finance directors would not be vulnerable to blackmail over their ‘personal issues’.
Ashley also lashed out at unions, the Government, City watchdog the Financial Conduct Authority (FCA) and financial advisers. He accused ministers and MPs of being too distracted by Brexit to help struggling retailers, said the FCA was not doing enough to stop ordinary shareholders being hurt and railed against unions over their branding of Sports Direct’s Shirebrook warehouse as a ‘Victorian workhouse’.
The 54-year-old said: ‘We have noted to the FCA we believe there should be a voluntary drug test for chief executives and chief financial officers of listed companies.
‘Having such undisclosed personal issues could lead to blackmail and force them to make decisions based on saving their own skin and potentially reducing shareholder value.’
Sports Direct deputy chief financial officer Chris Wootton, who is taking over from Kempster, said repeated delays to the publication of results were caused by the Belgians’ ’11th hour’ demand for tax payments.
Last night Ashley also dismissed rumours he could take the firm private so he has more freedom over how it is run.
He said that being listed on the stock exchange gives him ‘discipline’, adding: ‘Imagine if I was private, I’d be uncontrollable.’ Experts warned investors could flee Sports Direct due to fears over its finances.
Neil Wilson, chief market analyst at online trading platform Markets, said: ‘It’s a horror show. No wonder it was delayed. House Of Fraser is more like a House Of Horrors. There’s every reason to regret buying House Of Fraser now – such a shame, as there were such high hopes.
‘The cost burn from House Of Fraser is huge.
‘As bad as it could be, investors will run for the hills.’ In his update, Ashley suggested the outlook for House Of Fraser was bleak.
‘As we have continued to look under the bonnet as we integrate the business, we have found that the problems are nothing short of terminal in nature,’ he said.
‘We have done as much as we could realistically do to save as many jobs and stores as possible, and indeed we appreciate many landlords and local authorities have worked hand-in-hand with us as we tried to do this.
‘However, there are still a number of stores which are currently paying zero rent and that are still unprofitable, and unfortunately this is not sustainable.
‘We are continuing to review the longer-term portfolio and would expect the number of stores to reduce in the next 12 months.’