Business rates plea

Ashley says more Frasers stores will close next year

House of Fraser Glasgow

Frasers: some stores not paying rent (pic: Terry Murden)

More House of Fraser stores will close next year as Sports Direct continues its efforts to turn around the ‘broken’ business.

Majority shareholder Mike Ashley said business rates were killing the high street and called for urgent measures from the new government.

“A correction to the business rates would dramatically change the situation insofar as we could see light at the end of the tunnel and this could help save stores,” he said in the company’s half-year statement.

“Just to make it clear, we are not looking for blanket discounts on rates, we are just looking to pay a correct amount, be that at increased or decreased rates.”

He said Sports Direct, which acquired Frasers last year, is doing “as much as we can to realistically save as many jobs and stores as possible.

“However, despite our best efforts, there are still a number of stores which are currently paying zero rent and that are unprofitable and thus not sustainable. We are continuing to review the longer-term portfolio and would expect the number of retained stores to continue to reduce in the next 12 months.”

Jenners owned by House of Fraser

Jenners: no mention (pic: Terry Murden)

No specific mention was made of the future of the Jenners store in Edinburgh. The company is engaged in talks with its landlord amid speculation that it may relocate Jenners from its historic site in Princes Street.

“House of Fraser is all but fully integrated into the Group, and is a work in progress to fix,” he said. “The longer-term estate is still in the main to be concluded upon. However, given the seasonality of House of Fraser, something in the longer term we hope to address is the reliance on the Christmas period, and the fact our House of Fraser store estate – at least over this Christmas period 2019 – is secure means we are able to give Group guidance as we are confident in the outturn including House of Fraser.”

Chairman David Daly highlighted progress in tackling what he said was a “broken” House of Fraser group.

“We are starting to see the green shoots of recovery as we continue to integrate the business into the group. We are bringing new disciplines, experience and skills to bear which is helping the turnaround. Our Frasers strategy is to create a superior shopping experience for the consumer which will be led by the original Frasers. In the coming months and years, Frasers will prove to be a vital and successful part of the Group,” he said.

In the interim statement, Mr Ashley repeated his calls for a tightening up of corporate governance rules in relation to the crisis at Debenhams and the collapse of Goals Soccer Centres.

He said the the “inept board” of Debenhams “were complicit in the destruction of shareholder value.

“Goals is another shocking instance whereby various parties are guilty of incompetence or worse, from the auditors to the board, and it is again another example whereby regulators appear to not have enough power to do anything and politicians turn a blind eye.”

He added: “We fundamentally do not believe that the majority of advisers, particularly in the distressed and restructuring space, are in anyway regulated appropriately.

“Clearly, with the continued accounting scandals, overstated balance sheets, unsupportable dividends and continued corporate failures nothing has moved on any further in the last six months. 

“We will continue to flag this as a major issue and hope that it becomes apparent to politicians that the appropriate regulators must be furnished with the power to tackle what has become the Wild West in terms of deceit, dishonesty and self interest as they seek to generate significant fees, and generally not work in the best interests of their clients and other relevant stakeholders.

“Debenhams and its advisors being a recent relevant example in our opinion. I reiterate my stance that advisors that have been shown to act for their own ends should be severely fined.”

Shares in the group, later rebranded as Frasers, rose 31% after it reported underlying EBITDA over the period was up 21.8% to £181.2m. No dividend was declared.

Based on the above the company said total group underlying EBITDA (including House of Fraser but pre IFRS 16 adjustments) will grow between 5% to 15% from the FY19 pre-House of Fraser underlying EBITDA figure of £339.4m. This gives a range of between £356.4m to £390.3m for the year ending 26 April 2020.

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