House of Fraser plans 31-store high-end move but wants rent deals

By

Sandra Halliday

Published
May 13, 2019

More news has emerged around Mike Ashley's plans for House of Fraser with a report that he has pledged to invest hundreds of millions of pounds into relaunching the retailer, but is also seeking a three-year rent holiday.

Ashley struck one year no-rent deals with a number of landlords last summer and these are now approaching their end, with some of those landlords inpatient to either see some positive moves from the store or to have the chance to redevelop their sites.

Last week we heard that the company was planning a mini chain of stores that would be rebranded as Frasers and developed into a more luxury-focused offer. But now The Times has reported that Ashley wants to rebrand as many as 31 of the company’s shops, and given any closures that might happen, this means that the Frasers name would be the dominant one.

The report also said that the plan will take around five years to complete with five conversions happening in 2020.

Ashley believes there’s a strong appetite for true luxury brands around the UK, rather than just the premium labels in which House of Fraser previously specialised.

The Frasers stores will be opened on some new sites, as well as on existing sites that are being upgraded.

"In regional markets, there is so much appetite for aspirational brands and aspirational shopping, but they're starved of it," Sports Direct executive Michael Murray, who is leading the project, told the newspaper. "This isn't just a pipe dream we have the capital to do it.”

And that rent-free request? Ashley continues to believe that physical stores have a future, given the low margins in e-tail, but his commitment to stores comes at a price for landlords. He’s seeking lengthy rent-free periods in return for which landlords would see their properties being extensively refurbished. And future rents could be linked to store performance.

That could be a winning argument for some landlords, although of the 50+ HoF stores still trading, some won’t be suitable for a Frasers makeover.

Ashley already has a track record in luxury retail with his Flannels chain of more than 40 stores proving to be one of the more buoyant parts of the Sports Direct retail empire.