Mike Ashley buys House of Fraser

The Sports Direct owner has purchased the department store

Earlier this year Sports Direct purchased the landmark Frasers building from Glasgow City Council. Sports Direct took control of the Frasers brand this August, prompting fears of store closures and job losses across the brand’s numerous outlets. In September Mike Ashley, the company’s controversial CEO, made the claim that responsibility for any such job losses or closures or job losses would be with “greedy landlords” rather than with him or his management team.

According to Sports Direct, the company’s £95 million acquisition of the Frasers building has safeguarded the jobs of the roughly 800 local residents whose work is dependent on the continued operation of the store. Susan Aitkin, leader of Glasgow City Council, praised the deal following its announcement, saying: “A major investment on this kind of scale is a clear vote of confidence in Glasgow, and credit must also go to hundreds of Frasers staff who are absolutely integral to the business’s success and its enduring popularity with city shoppers.”

While the preservation of 800 jobs is undoubtedly good news, questions have been raised over whether the jobs in question were ever in danger. It is true that many House of Fraser outlets across the country are set to close under Sports Direct’s new ownership including stores in Edinburgh, Manchester and Hull. However, according to former managers from within House of Fraser (most of whom were replaced following the recent purchase of the group), the company’s most profitable outlet is its Buchanan Street store.

It’s unclear why Sports Direct would consider closing the most profitable outlet of its new acquisition should they not have been able to buy the building that houses it. It appears the purchase of the House of Frasers building is beneficial to the new owner in that it makes an already profitable asset more so rather than turning a failing asset viable. No matter how accurate, it is unlikely that talk of potential job losses was unhelpful to Sports Direct. Glasgow City Council has a vested interest in averting the political and economic consequences of 800 job losses within the city and it can be reasonably assumed this factor was considered during negotiations by both parties prior to the sale.

Sports Direct’s claim to have saved 800 jobs arguably assigns undue credit to a business that has in the past faced real criticism stemming from its relationship to its workers. In 2015, it was revealed that the company’s warehouse workers were effectively paid less than minimum wage due to mandatory and lengthy security checks that were carried out both before and after their shifts. It was also revealed that their warehouses operated under a “six strikes” policy under which staff were told they would be sacked should they breach company policy on six different instances. Infractions that would be counted towards this reportedly included taking “excessive/long toilet breaks” and “excessive chatting”. Under this system “a period of reported sickness” would also count to a staff member being let go. Staff at the sports shop’s distribution centres have consistently voiced concern over their employer’s attitude towards them, reporting to feel that they are viewed as “commodities rather than human beings”. A 2016 parliamentary inquiry supported these claims and characterised the environment in the company’s distribution centres as being that of a “Victorian workhouse”.

While Sports Direct claims credit for saving 800 jobs within Glasgow, it was recently announced that the company is considering closing up to half of its Evans Cycles stores. Evans Cycles, which was bought by Sports Direct last August, currently employs dozens of people in its two stores in the Glasgow area. On a national level, the company’s announcement has reportedly put the future of 440 jobs at risk.

Assigning any credit to Sports Direct for preserving jobs both locally and nationally must be balanced with consideration of both the company’s track record and current conduct as they relate to employment. According to the Guardian, a source close to Ashley described the rationale for buying Frasers in the following way: “Mike has secretly been trying to become respectable for years, so revitalising a lovely old store like Frasers in Glasgow really appeals to him.”

“It was now or never. If he didn’t buy House of Fraser he would always be known as the man who clothed a generation of tracksuit-wearers. He wants to leave a legacy.”

While it is clear that the Guardian’s source was referring to respectability in terms of being seen as an upmarket retailer, it is important that Ashley’s acquisition of Frasers doesn’t eclipse his company’s questionable track record when it comes to employment. As it stands, Ashley’s legacy in this area is an unenviable one at best.