House of Fraser extends administration by 12 months
Written by Hannah McGrath
House of Fraser has extended its administration period for a further 12 months, as owner Sports Direct battles “terminal” issues with the struggling retailer.
Creditors for the department store chain, which was bought in a pre-pack administration by Mike Ashley’s Sports Direct for £90 million in August last year, have now agreed to a further 12 months of administration until August 2020.
Sports Direct labelled the challenges facing House of Fraser “terminal” in its latest annual report and warned that more stores may need to close.
Speaking after the annual results were published, Sports Direct chief executive Mike Ashley criticised the department store’s former owners for under investing in the business and for “excessive and unsustainable outsourcing and financing”.
This assessment was a far cry from the initial optimism for the chain’s prospects, when Ashley had outlined plans to turn it into the “Harrods of the High Street”.
Sports Direct gave no financial guidance for House of Fraser this year and admitted it would have thought again at purchasing the department store. On its own, the chain recorded an operating loss of £54.6 million on the back of revenues of £330.6 million.
“We have done as much as we could realistically do to save as many jobs and stores as possible, and indeed we appreciate many landlords and local authorities have worked hand in hand with us as we tried to do this,” read a statement.
“We are continuing to review the longer-term portfolio and would expect the number of retained stores to reduce in the next 12 months,” it continued.
A turnaround plan for House of Fraser, as well as an update on its progress, is expected to be released by administrators EY in the coming week.