Mike Ashley is every PR man’s nightmare - he says what he thinks, no holds barred.
Mike Ashley is every PR man’s nightmare - he says what he thinks, no holds barred. So everybody at today’s analysts meeting with Sports Direct was keen to hear what he would say about his interest in House of Fraser.
Inevitably the first question at the meeting this morning was about the press speculation (in today’s Guardian) that Mike Ashley is trying to buy a stake in House of Fraser. At first, the CEO Dave Forsey tried to toe the party line and said that they couldn’t comment on the rumours.
Interestingly, however, Dave Forsey went on to say that M&A opportunities would come thick and fast in today’s climate and displayed a “Mike Ashley-like” way with words by commenting that there is so much fruit on the ground that Sports Direct are going to get backache just picking it off the ground, let alone picking the low-hanging fruit!
Mike Ashley played himself into the game with a quick quip about how he was wearing his “lucky jacket” today and that he would have to come naked next year if shareholders voted down his pay and incentive scheme at the AGM again.
After some comments about how valuable the former JJB warehouse in Wigan was proving to be to their distribution network, but that they still couldn’t comment on the JJB store acquisitions until the OFT gives clearance, Mike Ashley then decided to speak his mind about House of Fraser.
And he was pretty forthright on the subject, saying that he looked at buying a minority interest in House of Fraser nine months ago. So the recent rumours are old news and that his message for Don McCarthy (the Chairman) was that he was getting bored with the subject. And that if Don wanted to use his name to drum up bids for HOF, then he should pay for his own marketing or he wouldn’t be getting a Christmas card this year. Ouch!
Later on Mike joked that he would be happy to talk about his bid for Tesco, but, as jaws gaped open in the audience, Dave Forsey made clear that their relationship with Tesco is purely in terms of leasing some of their spare retail space in Europe, as they have done in Hungary (and as they have done with Ikea and C&A mall developments).
Beneath the jokes and matey banter, however, lies a very serious retailer with a great feel for product and customers and it is no accident that Sports Direct is very close now to getting into the FTSE 100 index, given its relentless growth towards annual sales of over £2bn and underlying EBITDA of over £270m. Mike Ashley has learnt how to play the City game and behave like a proper quoted PLC, with his able lieutenants Dave Forsey and FD Bob Mellors, even if he still can’t stop himself saying too much in public.
Mike Ashley is probably right to think that there is little equity value in House of Fraser after all the debt is taken into account, unless their online sales really take off - his own business is seeing such strong growth itself online that he clearly knows what’s he talking about. From several points of view, not least his relationships with the branded suppliers, it is in his interests to grow his Premium Lifestyle division. A stake in House of Fraser would be one way of doing it, but there are, it would appear, plenty of other acquisitions he could make.
As ever, it will be fascinating to see what Mike Ashley’s next trick will be and whether he can continue to grow Sports Direct‘s Retail store sales and Online sales so strongly in tandem, without any World Cup or Olympics boost next year.
About Nick Bubb
Nick Bubb has been a leading retailing analyst for over 30 years. He is a well-known commentator on UK retailing and is a founder member of the influential KPMG/Ipsos “Retail Think-Tank”.