Sports Direct has mulled HoF-Debenhams tie-up, but says has no plans to bid

By

Sandra Halliday

Published
Sep 12, 2018

A merger between Sports Direct-owned House of Fraser and rival Debenhams, in which the retailer owns almost a 30% stake, has been discussed by the Sports Direct board, an outgoing non-executive director of Sports Direct has said. But it appears that the idea has been shelved

At the annual general meeting in London on Wednesday, Simon Bentley mentioned that the prospect had been discussed, confirming widespread speculation that the two chains could eventually become one.

But Sports Direct later issued a statement saying: "Further to recent press speculation in relation to Debenhams plc, Sports Direct confirms that it does not intend to make an offer to acquire the entire issued and to be issued ordinary share capital of Debenhams."

And Bentley had also appeared to say the company already had enough on its plate for now: “It's been discussed, but you do think when you have the job of handling House of Fraser right now, then you might have your hands full,” Bentley said. 

But many believe that a merger is Sports Direct chief Mike Ashley’s long-term goal. His stake in Debenhams is just below the level at which he would have to launch a full takeover bid and with the UK retail sector going through historically tough times, the two venerable department store names could otherwise find themselves slugging it out in a battle for survival.

Many UK department store brands have failed over the years and in this century, the market has polarised with some (such as Selfridges) boosting their luxury offer, while in the middle market, John Lewis has become the go-to chain for the middle classes, offering a mix of external brand and its own labels.

Debenhams and House of Fraser have lagged the growth that has been seen at John Lewis and their stores and webstores have been fighting to attract the discretionary spend of the same consumers.