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London X City Releases Post That Looks At The Sale Of The House Of Fraser And Its Implications

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London X City is a London-based online magazine that has been keeping its finger on the pulse of the demise of the UK high street. In their latest post, they have reviewed the breaking news of the House of Fraser being snapped up at the last minute by Sports Direct, saving it from administration. Furthermore, the online magazine article investigates what the future of the UK high street may be.

Chloe, editor at London X City, says: "At the very last minute, Sports Direct came forward to snap up the House of Fraser for 90 million pounds, an absolute bargain. However, the question remains whether this will be enough to save this iconic store, or whether it is too little and too late."

Sports Direct is owned by billionaire Ashley, who also owns Newcastle United, a popular Premier League club. He has described his vision for the House of Fraser by comparing it to a high street version of Harrods. The latter is owned by a Qatari but was once owned by House of Fraser itself. The acquisition includes the 58 department stores across the United Kingdom, the stock, and the brand itself. However, Sports Direct did not purchase the pension obligations that still remained in the stores. Additionally, it is not clear whether the markets have faith in the move, as shares in Sports Direct dropped by 0.7%.

Chloe continues: "Ashley has stated that he wishes to retain as many of the stores as possible. However, he has not made any statement with regards to the 5,900 employees who work in the House of Fraser, or the 10,100 concession partners. This has caused a degree of insecurity in both the markets and department stores."

Those interested can read more about the acquisition on the London X City website, which also highlights Ashley's strategy of creating a "Selfridges of Sport" out of Sports Direct. To date, this strategy has been executed through the purchases of various pieces of equity, including French Connection, Debenhams, Findel, Game Digital, and Goals Soccer Centers. However, the success of the strategy appears to have been hit and miss, with the Debenhams investment in particular being wholly unsuccessful. Ashley currently owns a 29.7% share in Debenhams and share prices did rise by 1.6% after the House of Fraser acquisition.

The deal was a last minute deal, as Ernst and Young had already been appointed to serve as administrators for the store and no solution was found among creditors and investors in order to keep the business solvent. However, it seems that the long history of the store, which first opened in 1849 and went into private ownership in 2006, attracted Ashley, who continues to see a future in it.

Meanwhile, London X City also examines what the potential demise of the House of Fraser would mean for the UK high street. Chloe explains: "It seems that not a week goes by in which there isn't a department store that goes out of business or closes some of its major stores. Consumer spending is down, the cost of labor is up, property taxes are too high, and nobody seems able to compete with Amazon anymore. In 2016, BHS went bust, and this year alone there have been three Debenhams profit warnings, and John Lewis has stated that they are cautious as well. Something clearly needs to be done."

It appears that the UK government agrees and Philip Hammond, the UK finance minister, has hinted at taxing online retailers. The majority of online businesses in the UK are international, and Philip Hammond has suggested that an international tax system must therefore be created. He believes that, if an agreement can be reached on this, the playing field can be rebalanced to a certain degree.

The purchase of the House of Fraser has sent shock waves throughout the community. An 89% stake in the business had been purchased just four years ago by Nanjing Cenbest from the Sanpower Group in China, but by June of this year, the store announced that it would have to make 6,000 people redundant and close 31 stores if it were to survive. The C.banner group from China stopped the rescue program, however, refusing to put in more equity. While the fact that Sports Direct has purchased the store is welcome news to a certain degree, but it is also true that the store has come under heavy criticism as of late due to its poor corporate governance and terrible treatment of employees. Chloe says: "London X City will be keeping a close eye on this story. Staff are rightfully concerned about their future, whether the acquisition would be successful or not. Additionally, there are serious concerns about the pension fund, which was not taken over in the purchase."

Those interested in getting more information can visit the online magazine's website at www.londonxcity.com.

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About Londoncity :

London x city is company that reports all about whats hot about London. London is an extraordinary city that needs to be reported on. We cover everything from food and celebrities to sports, business and money.

Contact Londoncity:

Chloe

65-66Woodrow
London
se18 5dh

07841867380

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