Pandemic pandemonium for Mike Ashley and Sports Direct

Four years ago, Sports Direct found itself into hot water again after it failed to disclose its dealings with a distributor owned by Ashley’s older brother. Last year, it scrambled to find an auditor after Grant Thornton, its adviser, resigned. The Big Four all declined to work with Frasers.

He has now managed to burn bridges with landlords, too, after pausing rent payments or asking for significant cuts.

Property owners complain that Ashley is taking advantage of emergency laws rushed through parliament, which prevent landlords from kicking retailers out.

“What the Government inadvertently did when it protected smaller tenants from a minority of aggressive landlords, was to open the doors for the bullying aggressive tenants to use this to blackmail their financially weaker landlords by withholding rent,” says one Frasers landlord.

“The likes of Sports Direct are now trying to use this non-payment of rent to extract long-term concessions from landlords. To not pay any rent is farcical, even now when they’re open and trading again.”

Property owner Londonmetric launched legal proceedings against Frasers Group in April to reclaim the money it was owed at its Evans Cycles store in Martlesham, near Ipswich.

However, the Government’s pandemic moratorium left Londonmetric unable to take action when Sports Direct failed to pay on the June quarter rent day. Andrew Jones, chief of Londonmetric, said he plans to take legal action once the Government ban on winding up petitions is lifted. The business has also been taken to court in Ireland over rent.

“We have to [take action] because I have a duty to my shareholders. There cannot be a transfer of value from one group of shareholders to another without compensation, I have a duty to recover that debt, and recover it we will,” he says.

“If the Government extends the moratorium again until December [because of a second lockdown], there will be loads of property owners going bust because they won’t be able to service their loans,” another landlord adds.

Some observers take a more sympathetic view of its situation.“I think they’ve had a difficult lockdown,” says Greg Lawless, a retail analyst at Shore Capital says.

“House of Fraser puts pressure on the wider group in terms of the losses they are willing to take. Department stores thrive on tourism, they thrive on office workers and at the moment those are not there and it is unlikely to be returning anytime soon.”

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