Sports Direct boss shares House of Fraser plans, Debenhams rallies

14th Aug 2018 11:10

(Sharecast News) - Shares in Debenhams jumped on Tuesday on speculation of a takeover by Sports Direct after Mike Ashley pledged to keep most of House of Fraser stores open.Prior to Sports Direct's £90m acquisition of House of Fraser on Friday, hours after the department store group had called in the administrators, there had been plans to close 31 out of its total 59 stores.But Ashley told the Sun newspaper on Tuesday that he aimed to keep 80% of stores open, saying "In a year's time you can hold my feet to the fire on that."The Newcastle United FC owner also gave more details on his plans to make House of Fraser the "Harrod's of the high street', saying he wanted to introduce a 'concierge click and collect' service and that "the biggest and most important thing House of Fraser is missing is luxury brands" such as Gucci, Prada, Stone Island and Mallet footwear.Investors meanwhile were sending shares in Debenhams flying off the shelves, with the price up 13% to 14.41p - though still offering a sizeable discount to the 50p seen last autumn.Debenhams, in which Sports Direct holds a near 30% stake, has enjoyed a 20% rally since Sports Direct took ownership of House of Fraser.A formal bid "may be forthcoming in the near future", said Neil Wilson, chief market analyst at Markets.com. "The rally in Debenhams shares is a clear indication the market believes Sports Direct could be ready to pounce.""The indications are that the long-called-for tie-up between Debenhams and HoF is now very much on the cards. As noted last week, a move to effectively consolidate the two troubled department store chains into a single offering looks to be the only viable solution to their problems; combining the operations to reduce overheads and stop competing against each other will prove beneficial. Moreover, heavy investment in one at the expense of the other would seem unlikely."However, Wilson said it will probably all depend on whether Debenhams will agree to such a move."The House of Debenhams argument may be powerful but it might not happen. We may yet see a hostile takeover to create a high street giant with enough heft to survive."