DESPITE a £90 million deal to save House of Fraser from complete collapse, there were fears last night that thousands of jobs at the struggling retailer might go under new owners Sports Direct.
House of Fraser went into administration yesterday morning with stores staying closed. Within minutes, billionaire Mike Ashley’s firm bought business and the stores re-opened.
READ MORE: The fall of House of Fraser – the sad collapse of a one-time Scottish success story
During the day it emerged that one of Sports Direct’s offshoots, the luxury designer brand chain Flannels, would be the key to change for House of Fraser.
Ashley said: “We will do our best to keep as many stores open as possible. My ambition is to transform House of Fraser into Harrods of the High Street.
“This is a massive step forward and further enhances our strategy of elevation across the group. This will benefit both House of Fraser and Flannels in the luxury sector.”
READ MORE: How Mike Ashley built a fortune – and a ruthless reputation
Sports Direct said in a statement: “The group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business.”
Sports Direct, which already held an 11% stake in the department store chain, said the cost-cutting closure of 31 of its 59 stores is now on hold.
Administrator Alan Hudson, said the Sports Direct deal “preserves as many of the jobs of House of Fraser’s employees as possible”.
He added: “We hope that this [sale]will give the business the stable financial platform that it requires to flourish in the current retail environment.”
Past poor working practices at Sports Direct and Mike Ashley’s known ruthless approach to business are causing fears of job losses and changed working conditions.
Unite union officials said staff were entering “a period of great uncertainty and worry”.
The union’s regional officer, Scott Lennon, said: “Sports Direct is a leopard that has not changed its spots and we hope that its poor record on pay and employment practices are not transferred to the House of Fraser.”
Chinese firm C.banner pulled out of a rescue deal earlier this month, giving the company little chance of survival. For now at least there is some hope for the chain that was once the largest retailer in the UK, after being built from humble beginnings in Victorian Glasgow.
The MP for Glasgow Central, Alison Thewliss, called for a commitment to retain jobs and said: “I welcome the fact that, following unsuccessful talks between the retailer and its creditors, Sports Direct have agreed to take over the brand, and provide some short-term security for workers. However, it’s unclear at this early stage what the new owners’ long-term plans for the brand are.
“House of Fraser employs about 17,000 people in the UK, and has its flagship store on Buchanan Street in Glasgow city centre. The store is
vitally important for footfall, and to the wider retail environment.
“The brand has been a mainstay on the high street for decades, and I would urge the new owners to assure staff that their long-term employment is secure, and that there will be no diminution in their terms and conditions, as soon as possible”.
Paul Souber, co-head of Colliers International’s retail division commented: “With the latest news that Mike Ashley has purchased House of Fraser today, on the one hand this could be viewed as positive news for high streets nationwide as despite the doom and gloom surrounding the sector at present, this is really a boost in confidence for both landlords and retailers as well as employees in the trade.
In Edinburgh yesterday, customers at the Jenner’s store which is part of the group spoke of their relief as the store being saved: “It’s part of Edinburgh’s history” said one shopper from Corstorphine.
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