Frasers defends insolvency deals after MatchesFashion collapse
The owner of Sports Direct, House of Fraser and Flannels has faced scrutiny over its strategy of buying distressed companies, such as MatchesFashion, and swiftly placing them into administration.
Critics say putting companies into insolvency so soon after a takeover suggests a lack of genuine commitment to turn around those businesses, and is a means of asset-stripping: acquiring intellectual property while shedding liabilities such as creditor debts, stock, leases and staff. Others argue that Frasers is the only retail company trying to save failing businesses and the high street.
Chris Wootton, Frasers' chief financial officer, branded criticism of its strategy as 'unfair'. He said: 'A lot of what we acquire is very, very distressed businesses that are bankrupt.'
Wootton added: 'Without us saving them there has to be efficiencies found because … that's why they went into bankruptcy in the first place.
'We feel we can turn these businesses around and make them successful by bringing them into the Frasers Group ecosystem. We're very good at it and we've done it multiple, multiple times.'
Ashley founded the retail empire in 1982 with a sports shop in Maidenhead. The group, which rebranded from Sports Direct to Frasers after acquiring the eponymous department store chain in 2018, now employs more than 32,000 people.
Mike Ashley founded the retail group with a sports shop in Maidenhead
CHRIS J. RATCLIFFE/BLOOMBERG/GETTY IMAGES
Frasers has scaled up by buying troubled retailers at bargain prices, including House of Fraser, Jack Wills, Sofa.com, Evans Cycles and Missguided. In several cases it has ended up restructuring or liquidating them soon after.
The swift administration of MatchesFashion after its acquisition raised particular concern about the group's intentions. Frasers bought the Matches brand name and intellectual property for £19 million in a pre-pack deal in April last year. The transaction excluded £80 million worth of stock and the 250 remaining employees and came just a month after Matches had been placed into administration, with Frasers saying 'too much' would be required to save it.
Nick Beighton, the former chief executive of Matches, called the move 'unnecessary' and insisted that the business could have been turned around. The deal drew criticism from brands, creditors and employees for both its timing and impact.
Wootton defended the decision: 'Matches was a massively lossmaking business [and it] went into bankruptcy. We went in with our eyes open that it was going to be difficult to turn around and it proved to be. It wasn't like we went in with our eyes closed. We knew what would happen and ultimately we took a very quick decision to put it back into administration because we didn't feel we could, you know, turn it around successfully.'
He said Frasers was 'constantly looking at where we can grow', including further acquisitions.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
28 minutes ago
- Telegraph
Middle-income workers shoulder biggest tax burden increase
Middle-class workers are shouldering the biggest increase in the tax burden thanks to a stealth raid on thresholds, analysis suggests. The share of income tax paid by those who earn between £43,000 and £61,900 rose from 15.1pc to 17pc between 2021-22 and 2025-26, according to the TaxPayers' Alliance. During the same five-year period, the share of income tax paid by the top 1pc, those earning more than £201,000 a year, fell from 30.7pc to 26.6pc, the pressure group found. It comes as Chancellor Rachel Reeves faces a £50bn black hole in the public finances and declining tax revenue as high-net-worth individuals look to move abroad. Analysis by the Financial Times this month revealed there had been a 40pc rise in directors moving abroad since Labour's autumn Budget. The Taxpayers' Alliance report found the proportion of total income tax receipts increased for every group except for the top 1pc of earners, thanks to a series of stealth taxes first introduced by the Conservatives. Income tax thresholds, including the £12,570 tax-free 'personal allowance', were frozen at the 2021 budget by then chancellor Rishi Sunak until 2025-26. A year later, his successor, Jeremy Hunt, extended the freeze until 2027-28. Despite promising not to raise taxes on working people, Sir Keir Starmer has not ruled out extending the freeze further to 2029-30. Keeping thresholds frozen means earners lose a larger share of their incomes to tax, as inflation pushes up wages in a process known as fiscal drag. The stealth raid means almost 2.9 million more people will pay the basic rate of income tax in 2025-26 than in 2021-22, while over 2.6 million more will pay the higher rate. Including other rates, almost 6 million more people are forecast to be paying income tax than in 2021-22. John O'Connell, chief executive of the TaxPayers' Alliance, said: 'This is the sad but inevitable result of successive governments' assortment of anti-affluence tax policies, which penalise aspiration and success. 'The UK is now trapped in a doom loop with the Chancellor desperately scrabbling around for more cash to fill the fiscal black hole and increasingly finding her only option is to come after the middle classes. 'Rachel Reeves needs to now show some humility and reverse the policies that have done so much to drive away high earners.' The respected National Institute of Economic and Social Research on Tuesday warned slowing economic growth, a weak jobs market and Labour's failure to commit to welfare reform meant Ms Reeves was on course to miss her borrowing targets by £41.2bn. When combined with the £9.9bn of headroom the Chancellor has committed to keeping, it means she is facing a £51.1bn deficit in the autumn that will either have to be solved by raising taxes or cutting spending. The study also underlined the importance for the Treasury's balance sheet to keep the highest earners in Britain. Despite the proportion of tax paid by the top 1pc of earners falling, the group still accounts for more than a quarter of all income tax receipts. Analysis of Companies House by the Financial Times found that 3,790 company directors had left Britain between October and July compared with 2,712 in the same period a year earlier. Significant names have included Richard Gnodde, Goldman Sachs ' most senior banker outside the US, Nassef Sawiris, the Aston Villa co-owner, and British property tycoon brothers Ian and Richard Livingstone. It comes after Labour launched a wide-ranging tax raid after coming to power last year. This included abolishing the non-dom status and tightening inheritance tax rules. Laura Suter, of AJ Bell, said: 'Government tax policy in the past few years has had the dual outcome of pushing some of the wealthiest to leave the UK and also landing more taxpayers with higher tax bills at the same time. 'Together, this means that an increasing proportion of the total tax bill of the country is paid by middle earners, rather than the super-rich. 'Looking ahead, any potential tax-raising measures that Rachel Reeves makes in her next Budget could exacerbate this dynamic further.' Trevor Williams, a former chief economist at Lloyds Bank, previously warned Britain was facing a millionaires' exodus. Mr Williams said: 'Since 2014, the number of resident millionaires in the UK dropped by 9pc compared with the world's 10 wealthiest countries' global average growth of more than 40pc. 'Over the same period, the US saw a 78pc increase in millionaires – the fastest wealth growth [among these countries].' The Treasury insisted that under its Plan for Change it would keep more money in people's pockets. A spokesman said: 'This government inherited the previous government's policy of frozen tax thresholds. At the Budget and the Spring Statement, the Chancellor announced that we would not extend that freeze. 'We are also protecting payslips for working people by keeping our promise to not raise the basic, higher or additional rates of income tax, employee National Insurance or VAT. That's the Plan for Change – protecting people's incomes and putting money into people's pockets.'
BBC News
28 minutes ago
- BBC News
Redcar Council parking patrol CCTV cars to get £100k upgrade
A council has approved funding of £100,000 to upgrade CCTV car which captures footage of motorists flouting parking and traffic restrictions and introduce a second and Cleveland Council sanctioned spending on for new front and rear stingray cameras on its existing car which mainly patrols near in bus stops was another area set to be subject to increased monitoring, which in some instances blocked passengers from being picked up and dropped 2018 the enforcement vehicle had provided evidence leading to 2,450 penalty charge notices, the council said. A spending decision document said the greatest challenge for officers was the size of the borough and the number of schools with "significant challenges for repeated and equitable enforcement of restrictions".It said ensuring road safety around primary schools in particular on mornings and at home times was "imperative".A council spokesman said: "The authority is now looking to deploy a second enforcement vehicle which may be used in areas where crime and anti-social behaviour are identified as ongoing problems, as well as supporting public safety at events." The Labour-led authority signed off on £99,443 of funding, the Local Democracy Reporting Service sum included the cost of a five-year support and maintenance contract. Follow BBC Tees on X, Facebook, Nextdoor and Instagram.
Reuters
an hour ago
- Reuters
Zelenskiy says Russia seems more inclined now to a ceasefire
KYIV, Aug 6 (Reuters) - Ukrainian President Volodymyr Zelenskiy said on Wednesday that Russia seemed "more inclined" to a ceasefire, but details of a potential deal are of great significance and neither Ukraine nor the U.S. should be deceived by Moscow. President Donald Trump said his special envoy Steve Witkoff's meeting with Russian leader Vladimir Putin on Wednesday delivered "great progress," but Trump gave no specifics. Following the meeting, Zelenskiy had a call with Trump, joined by European allies. "Ukraine will definitely defend its independence. We all need a lasting and reliable peace. Russia must end the war that it itself started," Zelenskiy said on X. Trump, who has signalled frustration with Putin in recent weeks and has given the Russian president until Friday to make peace with Ukraine or face tougher sanctions, hailed Witkoff's visit as highly productive. But a White House official said the secondary sanctions that Trump has threatened against countries doing business with Russia were still expected to be implemented on Friday. An executive order introducing additional 25% tariffs on India for Russian oil imports was signed on Wednesday. "The pressure on (Russia) works. But the main thing is that they do not deceive us in the details – neither us nor the U.S.," Zelenskiy said. Ukraine has repeatedly called for an immediate and unconditional ceasefire. Russia, which now controls about a fifth of Ukrainian territory and proceeds with its advances on the eastern front, rejected the idea. National security advisers from Ukraine and allied nations were to meet soon to work out a "joint stance", Zelenskiy added.
