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Mike Ashley’s high street monopoly

Over the past two years retail tycoon Mike Ashley has been treating the UK high street as his very own personal Monopoly board. However instead of desires to develop houses and hotels on his newly acquired property, Ashley has the grander vision of ‘saving the UK high street’ and turning House of Fraser into the ‘Harrods of the high street’. Below Retail Sector details his spending spree and even those that managed to escape his expansive gaze.

Agent Provocateur 

Date: March 2017 

Acquisition price: £31m

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No. of Stores: 10 

The beginning of Ashley’s Monopoly-esque spending spree starts with the pre-pack administration deal of lingerie company Agent Provocateur. Acquired for around £31m through Sports Direct’s investment vehicle Four Holdings from private equity firm 3i Group after it entered administration. 

At the time its co-founder Joe Corré, the son of Dame Vivienne Westwood, said the deal was “a disgrace to British business” and “preposterous”. However since the deal the brand has seen to have made a resurgence with its new leadership team reportedly quoted as claiming the business was on track to become profitable in the “near future”. It also has 53 stores and concessions globally around the world and is now stocked by Net-a-Porter, Browns and Farfetch in the UK.

House of Fraser 

Date: August 2018 

Acquisition price: £90m 

No. of stores: 54

Just hours after the 169-year-old chain went into administration and talks with its creditors failed to reach an agreement, Ashley swooped in and acquired the department store for £90m. He vowed to turn the store into the “Harrods of the high street” with plans to open upmarket stores under the name ‘Frasers’ selling upmarket brands such as Gucci and Paul Smith.     

However Ashley may be rueing his most notable acquisition to date after House of Fraser severely impacted Sports Direct’s full-year results, with the retailer adding it has found problems in the company that were “nothing short of terminal in nature”. 

It said “serious” under investment in stores and appropriate support services, “excessive and unsustainable” outsourcing and financing, and selling brands to the company’s Chinese parent shortly before administration are just some of the “many problems faced”.

It currently manages to operate 53 stores around the UK after its Hull branch closed earlier this month. However according to reports its Altrincham, Lakeside and Thurrock stores are expected to be redeveloped and four or five more are expected to close after christmas trading this year. As many as 20 more could go in the following 18 months. 

Evans Cycle 

Date: October 2018

Acquisition Price: £8.8m

No. of Stores 55 

After fellow Cycling and automobile retailer Halfords pulled out of a possible deal, Evans Cycles was bought out of administration by Ashley’s Sports Direct in October 2018. At time Ashley warned that around half of the retailers 62 stores in order to save the company. However since then those warnings now appear to be wide of the mark and as announced in Sports Direct’s latest the result the number of Evans Cycle stores listed as still operating in the UK is 55. It also revealed that the company reported revenues of £44.6m and had an operating loss of £17.6m.

Sofa.com and Game Digital

Date: February 2019 and July 2019

Acquisition price: £1 and £52m

No. of stores: 10 and 211

Ashley beat out competition from ScS in February of this year to acquire online sofa retailer sofa.com for a fee of £1. The acquisition was devised to help Ashley to add further Sofa.com concessions to the House of Fraser (HoF) chain he bought from administrators earlier in the year. The company also operated nine standalone stores. It is yet unclear what Ashley’s long term plan for Sofa.com is. 

Ashley also required the remaining shares in video game retailer Game Digital in July for a consideration of £52m The group said it intends for the cancellation of trading in the Game shares on the London Stock Exchange’s main market for listed securities and listing of the Game shares on the premium listing segment of the official List.

Sports Direct also announced plans for Game include diversifying and future-proofing its product mix to” keep up with technological developments and ensure that it does not become irrelevant to customers”. It is believed it aims to do this by developing Belong, Game’s competitive gaming and eSports experience centred around physical ’arenas’, bringing both casual and competitive gaming to communities nationwide.

‘Pass go, please do not acquire property’ 

However along with Ashley’s numerous high street conquest there are also a growing number of examples where his endless pursuit of retail estate has been left unsatisfied.  

Findel 

In April of this year Ashley was forced to abandon a takeover bid for online school supplies retailer Findel, after its board rejected a £140m takeover offer made by the Sports Direct boss describing his bid as “opportunistic”. Its board repeated it believed the offer “significantly undervalues” the company after the offer Sports Direct made a mandatory offer of 161p per share in cash for the business earlier this month.

It seems to be the right call after analysts valued the company at around 300p- 350p per share for the stock.Its board also revealed current trading was “strong”, with pre-tax profits for the year currently expected to come in between £26m and £28m.

Patisserie Valerie

In February this year, around the same time it announced its deal to acquire Sofa.Com the retail tycoon abandoned a deal to acquire the catering company Patisserie Valerie after it went bust after a £40m accounting fraud was discovered at the firm. According to reports Sports Direct offered £15m for the remaining 121 outlets, but was told by administrator KPMG it would need to offer up to £2m more than this, which Ashley decided against. 

Irish private equity firm Causeway Capital Partners part-rescued the company later that month acquired 96 stores in a deal worth £13m. The Dublin-based fund currently owns some cafes within its portfolio, including BB Bakers & Baristas, which controls 65 stores in the UK and Ireland.

Debenhams

Credit: Debenhams Press

Arguably Ashley’s biggest deal that never was, department store chain Debenhams fell into the hands of its lenders after its board rejected a £200m rescue bid from Sports Direct in April this year. This led to Sports Direct’s 30% stake in the department store being completely wiped out.  

Ashley angered by the events criticised the department store’s advisors, saying they should be “put in prison” and described the  takeover as a “national scandal”. As a final retort he launched a legal challenge against the rescue restructure – which it later withdrew in July this year.

Under the new ownership of Celine UK NewCo 1 Lt, Debenhams confirmed plans to close at least 22 stores with creditors also approving plans impose big rent reductions to its remaining stores.

In August, Debenhams announced the appointment of Stefaan Vansteenkiste as its new CEO and revealed its chairman and the man that helped foil Ashley’s takeover, Terry Duddy, was to step down from his role.  At the time Vansteenkiste said that Debehams and the retail industry at large faces a “challenging environment”, but insisted Debenhams has a “clear plan and a great team of people who are committed to delivering it”.

A plan and team that does not include Ashley and the rest of his monopoly holdings.

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