Last week, Mike Ashley announced that Sports Direct had acquired House of Fraser for a sum of £90 million, rescuing the much-loved department store group from liquidation.
Here is everything we know so far about the take-over.
What went wrong for the company?
The real warning signs began with the announcement of widespread store closures earlier this year, however the company’s woes have been well-documented, with several takeovers in previous years.
The general consensus is that the company’s inability to modernise and deal with changing consumer habits were a major factor in House of Frasers’ descent into administration.
What will happen to the 10,000 pension holders?
As part of their ‘pre-pack’ purchase of the company’s brand, assets and stock, Sports Direct will not control the pension scheme, which puts the benefits of pension holders at risk.
The Pension Protection Fund (PPF) are currently expecting to carry out an 18-24 month assessment as to the condition of the pension fund. PPF typically pays out 10% less than some recipients would receive from their employers.
If the pension fund is correctly valued, it could be picked up by another insurance firm.
This type of ‘pre-pack’ deal has previously been criticised for allowing new buyers to purchase a company without taking on pension liabilities.
Are they still accepting gift cards?
With gift cards ranging in value up to £250, House of Fraser customers remain in the dark, as new owner, Sports Direct, have claimed “no liability” for existing gift cards.
However, customers have been advised to send vouchers by tracked delivery to House of Fraser’s head office, after which a replacement should be receieved.
The postal address is Gift Cards, 27 Baker Street, London, W1U 8AH.
What if I have an outstanding order online?
While no official guarantee has been given by Mr Ashley, the official line seems to be that business will continue as usual and orders will be honoured according to their initial delivery date.
The website is still taking orders and stores remain open, so any outstanding purchases seem to be fairly safe for now.
WHAT COULD CHANGE
Will stores be closing?
Prior to Mr Ashley’s takeover, over 50% of stores were earmarked for closure. However this figure could change, after Ashley began negotiations with landlords over new rental costs for each store.
He has recently vowed to keep 80% of stores open.
Stores previously earmarked for closure included Edinburgh’s Fraser’s store in the West End, which was served a notice to quit by the landlord.
It’s currently unclear if this particular lease will be part of Mr Ashley’s renegotiation effort.
Are jobs safe?
House of Frasers employ around 17,500 people in the UK and Ireland. Previously around 6,000 job losses had been expected, however this has changed with Mr Ashley’s recent takeover.
The number of jobs potentially at risk will become more clear once Mr Ashley completes negotiations with landlords. It’s likely that in the result of dimished opportunities at House of Fraser’s stores, some will be offered transfers to Sports Direct stores.
Employees at the Edinburgh Fraser’s branch were previously told that they will have the opportunity to move to the company’s Jenners store at the other end of Princes Street.
What differences will shoppers notice in-store?
It’s hard to tell. Branding will remain the same, however Mike Ashley has unveiled plans to make the department store franchise “the Harrods of the high street”.
In certain branches, Sports Direct may be given floor space, or else the company may choose to re-facilitate parts of high-rent stores as gyms or office space in an effort to increase visitors to the high street.