Mike Ashley and his family, the owners of Sports Direct and House of Fraser, are looking for shopping centers that they can purchase and then fill with their brands. They bet on brick-and-mortar’s long term appeal.
Michael Murray, Chief Executive of Frasers Group, and Mr Ashley’s son-in law said that recent decisions to purchase shopping malls in Luton, and Dundee, were part of a planned to fill them with more brands of his company before selling them again.
This comes after the value of shopping centres has plummeted in recent years due to a drop in footfall, wiping billions from the balance sheets on paper of landlords like Hammerson and Intu.
Frasers Group, according to Mr Murray, believes that there are good bargains available now which could help the company improve their presence in key destinations.
The FTSE group bought the Overgate Centre and The Mall in Dundee this year for £30m each.
The company is reportedly also bidding on the Junction 32 outlet near Castleford, just outside of Leeds.
Mr Murray said that the deals would enable Frasers to secure advantageous store space for its ever growing collection of brands. This now includes House of Fraser and Sports Direct as well as Flannels Game Jack Wills Evans Cycles Everlast Gyms.
The Telegraph quoted him as saying: “We have hundreds of retail stores in the UK, and we know as well as anyone else which retail locations perform better than others.”
The Mall is the only place to shop in Luton. There are no other shopping centres to move to and the high street does not exist.
He said that buying the entire shopping center “provides the opportunity to go into, put Frasers – at the right size, an elevated Sports Direct – bring in Flannels and bring in an Everlast Gym, really repurpose the centre with our own occupational needs.”
He added that Frasers will sell the centres when it is satisfied with their presence.
“Like we did last year, we sold around £200 million in properties because we added all the value to these shopping centres and retail park through our occupational requirements.”
He said that physical shops were still an important way of serving customers , despite the growth in online shopping.
“We believe that bricks and clickings are much stronger together than individually.”
Frasers Group reported a profit of £661m (roughly double) for the period ending April.
The company bought 15 brands, including Choice and Missy Empire, from JD Sports’ rival.
The retailer has also purchased stakes in Curry’s, Boohoo and other retailers, leading to speculations about its intentions.
The group’s annual revenue increased by more than 15pc, to £5.6bn.
Frasers expects its profits to continue growing this year as the “momentum continues”.
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