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Despite experiencing the first “green shoots of recovery” further House of Fraser store closures are to be expected, Mike Ashley has warned.
Commenting on the company’s latest half-year results, Ashley said Sports Direct is doing “as much as we can” to save as many jobs and stores as possible however a number of stores which are currently paying zero rent and that are unprofitable are “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”, he added.
The news comes as Sports Direct reported a 58% rise in underlying profits-before-tax to £101.8m for the six months ending 27 September 2019. Group sales also rose 14% to £2.04bn, with statutory profits up 160% to £193.4m – attributed to its improved trading result and profit on sale and leaseback of its Shirebrook campus.
In the report Ashley also criticised the current business rate system urging the government to “expedite reform before it really does become too late”.
Ashley said: “As I note above there are House of Fraser stores paying no rent but still losing money. 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.
“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.”
Shares in Sports Direct spiked as much as 30% following the announcement.
Sports Direct shareholders also met on Monday (16 December) to confirm the change in the retailer’s corporate name to the Frasers Group, previously announced last month.
