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Seems that any high street business that's gone under in the last few years has been quickly bought by him. He either a) just likes chucking (other peoples) money away or b) is actually very good at what he does. 🤔
He must make money to make the purchases he does?
https://www.bbc.co.uk/news/business-53886990
I would have thought gyms would be worth a punt at the moment. They'll continue to make a loss until a vaccine, which will hopefully be early next year. Provided he can absorb that loss, he's got a good asset for the next few years.
So today's announcement is not a huge surprise, although I agree about some of the other things.
If he has, he didn't plant it in Newcastle
He uses other people’s money. You buy the company then transfer the cost of the purchase to the company you just bought as a debt. You now own the company having not spent any of your y on it
Cue Lonsdale concessions in reception and clothing stands between equipment on the gym floor.
Money's cheap to borrow, so he just borrows more and loads the balance sheet of his new acquisition / subsidiary with the debt. He then makes a thumping great corporate services charge so he creates himself a big corporate profit and pays himself a nice bonus for all his hard work. Meanwhile, most of his staff get paid minimum wage / need Universal Credit to survive and treated like shit - welcome to the new utopia!
His track record of turning round his acquisitions is pretty poor so far, he buys struggling businesses and they continue to struggle under his supervision.
I thought Fraser Group last week announced that it's closing stores left right and centre? To be honest at this point he's just buying the brand names and flogging off anything of value
The olympic champion of disaster capitalism
I thought Fraser Group last week announced that it’s closing stores left right and centre? To be honest at this point he’s just buying the brand names and flogging off anything of value
I read it could be a way of frightening landlords into accepting lower rents, though it does all seem a bit suspicious.
I like The Guardian's Nils Pratley's take on it all...
Frasers Group talks about their stores as a ‘work in progress’; others might call it a mistake
Closures are House of Fraser stores which had been flagged for some time.
He's bought retail assets which previous owners couldn't make work; without that there would have been even bigger job losses in retail.
Consider Debenhams - they rejected multiple offers of investment/support from Ashley which included interest free loans. Now they're dead in the water.
He runs a successful business; that and his combative attitude make him unpopular.
Read the latest available report and accounts on the companies house website to understand more about his business.
For clarity, I'm not an apologist for Ashley and am not an employee.
He’s bought retail assets which previous owners couldn’t make work; without that there would have been even bigger job losses in retail.
More likely all he's bought is some time, buying them as a pre-pack with no debts just resets the clock, doesn't mean they are necissarily saved, he still has to turn them round into profitable businesses..
He sold his Sports Direct headquarters a couple of years ago - he's now renting it back That must have given him a few quid to spend.
I read it could be a way of frightening landlords into accepting lower rents,
Good point
I know he's a bit of a hate figure, but he is actually good as what he does, even if what he does is a bit 'low rent'.
Buying a business in liquidation gives him a lot more options than the business had when they were trading and he's known for being utterly ruthless, I wouldn't work for him or any of this businesses in any capacity willingly.
He's not unique in that, he just has different PR - how many beloved or formally beloved Businessmen in the UK have "saved" failing business, "saved" 50% of the workforce" and "saved" countless other jobs in suppliers etc - Branson, Sugar and all the Dragons have at one time or other done the same, they're hailed as Heros as they grab it cheap at the 11th hour, make half the workforce redundant, close places that don't make enough money and otherwise gut the business, drag it back into the black and sell it off for a huge profit in a few years. They just spin a negative into a positive, Mike Ashley just loves to play the prick.
Rockhopper - that's a sale & leaseback; absolutely bog standard business practice for years
BT & HMRC are 2 examples who did it with their entire property estate.
Nick & Horatio - rent renegotiations are now the norm in retail so, again, nothing new there. Ashley wouldn't be the first to make noises about rents or intimate possible store closures without concessions from landlords.
P-jay, you've summed it up.
Starting with 1 store in the early '80s;yep, he's definitely been successful and doesn't play the 'city' game which is one reason he gets adverse publicity.
Good for him that he isn't bothered by city scribblers.
He clearly understands his businesses way better than outsiders throwing stones.
footflaps
SubscriberHis track record of turning round his acquisitions is pretty poor so far, he buys struggling businesses and they continue to struggle under his supervision.
But he makes money while they struggle. He's not really trying to build an empire in the classic way.
dovebiker
SubscriberMoney’s cheap to borrow, so he just borrows more and loads the balance sheet of his new acquisition / subsidiary with the debt. He then makes a thumping great corporate services charge so he creates himself a big corporate profit and pays himself a nice bonus for all his hard work.
Yup. Couldn't believe it when I found out that Maplin was making a profit, except for the repayments and huge interest on the loan which they were forced to take out to cover the costs of someone buying them. "Hey, I'm short of cash, can I borrow a tenner to see me through to tomorrow?" "No, but I'll buy you out and give you that tenner" "Oh sweet, that sounds great!" "Right, here's your tenner, also you owe me a million quid and the interest is £20 a day" "But I've only got a tenner"
Yup. Couldn’t believe it when I found out that Maplin was making a profit, except for the repayments and huge interest on the loan which they were forced to take out to cover the costs of someone buying them.
The Private Equity value add, buy a profitable business then drown it in debt, walking away with all the equity.
I know he’s a bit of a hate figure, but he is actually good as what he does, even if what he does is a bit ‘low rent’.
I'd say he was good at what he used to do ie "pile it high, sell it cheap". Ever since he decided to go upmarket and started buying dozens of failing businesses he seems to have lost his way.
Nike / Adidas still won't let him sell their highly profitable top end gear as he's considerd too low rent, which seems to be his motivation.
Unclear if he'll suceed. If he'd concentrated to his core business he'd probably be better off by now, although he's still rich, so probably doesn't care. Share price hasn't recovered since his hayday in 2013.
I thought he had some kind of personal grudge against Dave Whelan - which would make buying out what's left of his business and presumably rebranding it particularly sweet? I'm sure we could all dig around in the sofa and find a few quid in those circumstances...
I thought he had some kind of personal grudge against Dave Whelan
I think he has grudges against a lot of people. A bit like Trump, striving to be accepted but just making more and more enemies along the way.
The Private Equity value add, buy a profitable business then drown it in debt, walking away with all the equity.
This really ought to have been made illegal by now, really is a shit form of business
I’d say he was good at what he used to do ie “pile it high, sell it cheap”. Ever since he decided to go upmarket and started buying dozens of failing businesses he seems to have lost his way.
Nike / Adidas still won’t let him sell their highly profitable top end gear as he’s considered too low rent, which seems to be his motivation.
Unclear if he’ll succeed. If he’d concentrated to his core business he’d probably be better off by now, although he’s still rich, so probably doesn’t care. Share price hasn’t recovered since his heyday in 2013.
Yeah, but we could be in danger of confusing Sports Direct with Fraser Group, House of Fraser has had a bumpy couple of years, but all but 1 of their stores is still open, and they're not selling £8 tracksuits out of them, not massive over-sized mugs. Evans is still trading and selling the same sort of stuff they did before - I note they're currently offering a £189 FS Muddyfox on their website, but because I don't usually look for stuff like that, I don't know if they were prior to his take-over.
He doesn't seem a nice man, he's an intimidating character - I'm sure they'll announce half of the DW places will close, only for them to stay open once their landlords decide they'd rather take 50% or less, even nothing for them for a couple of years than pay the rates on a empty store as retail heads into a correction that will be permanent.
Ashley and Whelan had form; when Ashley was on his way up Whelan said something like '...there's a club up here in the north, son, and you're not part of it'.
Not long after that Ashley alleged JJB, then owned by Whelan, was involved in price fixing of replica footie shirts; investigation followed and JJB copped multi million fine.
As for comment above re private equity, that's the true poison spreading throughout the retail and leisure sectors; hugely leveraged businesses being crippled by massive debts incurred to pay the new owners.
It's worth noting that Ashley has been vociferous in his criticism of private equity.
Nike / Adidas still won’t let him sell their highly profitable top end gear as he’s considered too low rent, which seems to be his motivation.
It'll annoy Newcastle fans yet further to know that this was his entire motivation for buying their club. He thought owning a premiership football club would get him a seat at the top table with the big boys. He was wrong.
It’ll annoy Newcastle fans yet further to know that this was his entire motivation for buying their club. He thought owning a premiership football club would get him a seat at the top table with the big boys. He was wrong.
There is no class so pitiably wretched as that which possesses money and nothing else.
Has HoF stayed reasonably up-market (haven't been for a while so don't know)?
Branson, Sugar and all the Dragons have at one time or other done the same, they’re hailed as Heros
Branson in particular really gets my goat. The guy is an absolute chancer, but has until recently managed to attach his own brand to that of Virgin, and hence be seen as some sort of hero.
I know someone who’s had dealings with Ashley - he’s a bit of an ar$e. He might loathe private equity, but he’s borrowed their playbook
Has HoF stayed reasonably up-market (haven’t been for a while so don’t know)?
I'd be amazed if it did....
He might loathe private equity, but he’s borrowed their playbook
I think he's just jealous of their accents and public school education....
Has HoF stayed reasonably up-market (haven’t been for a while so don’t know)?
I’d be amazed if it did….
I'm not into shopping, but the one in Cardiff is largely the same as far as I can tell.
He buys companies, strips off the profitable parts, while cutting costs then uses it to borrow more money to do the same all over again.
This works because a) he does not care about the longevity of a company b) he is a ****.
HoF, last time I looked which was
pre-Ashley, was a random collection of franchises.
IMO there were only 2 options - complete refresh and reposition or close.
Don't agree that he's borrowed the private equity playbook.
He hasn't loaded up businesses with debt to enable him to extract as much equity as possible.
As for NUFC they're on a sound financial footing - unlike most other prem teams - but that doesn't win anything so he's universally loathed by their supporters.
and they’re not selling £8 tracksuits out of them,
You're right in so much that.... the top floor of the Glasgow HoF has a bunch of Sports Direct stuff on rails... but nobody even looking at them and no staff even bothering to stand in their vicinity. So there are £8 tracksuits in House of Frazier..... that they are not selling. 🙂
I've always been suspicious of Sports Direct.
Their big shop in Manchester city centre was always empty, had loads of staff, and operated on very low prices and therefore margins.
It never seemed like the retailing juggernaut that could vacuum up other businesses.
Just didn't make sense.
These businesses he's buying were saddled with 10s if not 100s of millions of debt. Even if he loads the whole buyout transaction into them as debt for a business like Evans its a totally different starting point. No reason some of them can't be turned around but I don't think department stores have much of a future so the likes of Frasers will always struggle.
Quite sad to see our local Evans has gone for good, opened briefly post lockdown, now gone.