House of Fraser, the Chinese-owned UK department store chain, entered administration on Friday only to be swiftly snapped up by retailer Sports Direct for £90 million ($115 million, 100 million euros).
The 169-year-old company joined a string of major British retailers who have fallen victim to fierce online competition, rising business rates and stretched household budgets amid Brexit uncertainty.
House of Fraser, which has department stores dotted across Britain and Ireland, currently employs about 17,500 staff — but 6,000 jobs were already on the chopping block in an overhaul that had been unveiled in June.
Shortly after it revealed it would be appointing administrators, Sports Direct announced it had acquired almost all the business and assets for £90 million.
“The group has acquired all of the UK stores of House of Fraser, the House of Fraser brand and all of the stock in the business,” the firm said in a statement to the London Stock Exchange.
Sports Direct owner Mike Ashley already had an 11 percent stake in the department store chain, and also has stakes in rivals such as Debenhams and French Connection.
Looking for rescuer
House of Fraser, which had been controlled by the Chinese conglomerate Sanpower, had earlier announced the appointment of Ernst & Young as administrators.
Administration is the process whereby a troubled company calls upon independent manager in a bid to restructure the business and remain operational.
Joint administrator Alan Hudson said the sale “preserves as many of the jobs of House of Fraser’s employees as possible”.
“We hope that this will give the business the stable financial platform that it requires to flourish in the current retail environment,” he added.
House of Fraser revealed last week that it had lost a proposed investment from the Chinese owner of Hamleys and was looking for a new rescuer.
It had already said in June that it was shutting 31 of its 59 stores across Britain and Ireland.
The group had announced the drastic restructuring after agreeing a 51-percent sale to China’s C.banner International Holdings, which already owns the London toy retailer Hamleys, for £70 million.
However, C.banner said a slump in its own share price had rendered the transaction “impracticable and inadvisable”, and it axed the deal.
Sports Direct said in its statement that “for the year ended 28 January 2017…, the House of Fraser group had gross assets of £946.3 million and made £14.7 million net profit”.
Struggling UK high street
British retailers with high numbers of stores are suffering from fierce online competition from the likes of Amazon, while battling against discounting in big supermarket chains.
The country is also experiencing weak household spending generally amid economic uncertainty generated by Britain’s looming EU departure in 2019.
“There’s no denying it’s a worrying time for retailers at the moment and some retail space most probably has no future,” said Maxine Vogt, analyst at research consultancy Euromonitor.
“However their fate is not sealed and we are still far from the ‘retail apocalypse’ many predicted at the end of last year.”
British budget chain Poundworld collapsed earlier this year with the loss of some 5,100 jobs.
Meanwhile, thousands of jobs have also gone with the demise of clothing outlet Calvetron, Toys ‘R’ Us toy chain, Maplin electronics stores and Warren Evans bed manufacturers.