Opinion: Mike Ashley is not responsible for House of Fraser supplier woes

Lurid boozing antics, an often confrontational style, and warehouse working practices that he himself acknowledged were grim are among the associations that might be made with the brash tycoon.

But in the case of House of Fraser, Ashley has wrongly been made a whipping boy for the desperate plight in which the department store group’s suppliers were left by former owner Yuan Yafei’s Sanpower business.

After Ashley swooped on House of Fraser for £90m, buying the retailer out of administration, he pledged to keep as many of its 59 shops open as possible – that’s about 80% of them.

“While there may be much to blame Ashley for, the predicament of HoF suppliers isn’t one of them”

Places such as Plymouth, where HoF’s disappearance would have weakened the town centre’s retail offer, can now look forward to the chain’s continued presence.

As well as sighs of relief that HoF had a new owner with a strong track record, expectations were high that Ashley would compensate suppliers – whether logistics companies, brands or concessionaires – for debts built up under the previous owners.

But those suppliers’ hopes were surely unrealistically high.

Ashley’s deal gives HoF a second chance, but why on earth should he be expected to pay for goods and services that pre-date his ownership? Instead of starting his turnaround effort by investing to put HoF into shape, money would go to settle bills for which he is not responsible.

‘Misled’

Supplier anger is understandable. Some of the amounts outstanding to them are jaw-dropping – XPO Logistics tops the list at £30.5m and its resulting spat with Ashley has kept HoF’s website shut for weeks.

And while for smaller companies the sums may be less, they are proportionately just as important and could decimate full-year earnings as well as cashflow. Some may be staring into the abyss.

“Ashley is right to direct focus towards the behaviour of HoF’s former owners”

But they are not in that position because of Mike Ashley. They are there because they bought into the story peddled under the old regime – a story that now looks more threadbare than ever.

Ashley this week hit out against the previous owners, including chairman Frank Slevin.

He told The Sunday Times that, in his view, suppliers had been deceived. Ashley said: “I believe that XPO and others were totally misled by Frank Slevin and the House of Fraser board, and the demise of House of Fraser should be fully investigated.” He wants the Insolvency Service to intervene.

Ashley is right to direct focus towards the behaviour of HoF’s former owners. It was on their watch that House of Fraser went into full tailspin and it beggars belief that they continued to build up debt on such a scale when there was such uncertainty over rescue plans and associated financing.

Apportioning blame

This week Sports Direct investors were advised by shareholder advisory groups, ISS and Glass Lewis, to oppose Ashley’s re-election as a director at Wednesday’s AGM because of “poor governance” at the business he founded.

Fair enough. Shareholders can exercise their voting power – limited as it is because of Ashley’s 61% stake – if they so choose. When criticism is legitimate, it can be made.

However, while there may be much to blame Ashley for, the predicament of HoF suppliers isn’t one of them.

While some have removed stock from House of Fraser, the sums of money that should have come suppliers’ way show that, if run successfully, it should be a valuable partner.

Although they may not recoup past losses, Ashley could help them sustain future income.