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Ashley lectures MPs: I'm not Father Christmas, it's not my fault high street dies! #Sportsdirect — Transcript

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0:02zero hours contracts. Would would you be
0:04surprised to learn that the majority of
0:06people on zero hours contracts like
0:09being on zero hours contracts?
0:11I probably would. Yes.
0:12Yeah. Okay. So, that's what we'll leave
0:13it there. So, we'll leave it the
0:15majority of people if they want to be on
0:18zero hours contracts, why would I stop
0:20the majority getting what they want?
0:23Well, Mr. Mr. Ashley, you're you're not
0:25then going to ensure or enforce a
0:29position where people who don't want to
0:31be on zero contracts and house of phrase
0:33are currently not on them are forced to
0:34move over.
0:37I'm just asking you a simple question
0:39and I'm giving you a very simple answer.
0:41Yeah,
0:42I am telling you if the majority of
0:45people want to be on zero hours
0:47contracts then that's what we will have.
0:50The majority will rule. If the majority
0:53don't want don't want zero hours
0:56contracts, we won't have zero hours
0:58contracts. I can't always fix it for
1:02every last person. It's not possible. I
1:06can
1:06How will you decide if the majority
1:08wants our contract?
1:09We because we've had surveys at Sports
1:10Direct and they came out with the vast
1:12majority wanted them. Same as
1:14McDonald's. And you know what? People in
1:16retail tend to be the same. They tend
1:19not to be very different from one thing
1:20to another.
1:22So, and by the way,
1:23how are you going to judge the mood at
1:24House of Fraser employees in
1:26How am I going to judge whether House of
1:28Fraser employees all want to transfer to
1:29zero contracts? How are you going to
1:32happy to have surveys? I have no problem
1:34with surveys. I have no problem with
1:36surveying Sports Direct people again.
1:38And if the vast majority no longer want
1:40zero hours contracts, then let's get rid
1:41of them. No problem for me. I it doesn't
1:44make that much difference to me whether
1:46or not they're on zero hour or they're
1:48not on zero hour. You you seem to think
1:51there's some huge advantage of zero
1:53hour. It's the flexibility that it
1:55brings. Zero hours are very simple.
1:57Students love them because they can come
2:00and do their when their term time is
2:02finished they can then just come and say
2:03right I want to work I'm h I don't want
2:06to commit but if you if you need me I
2:08can come in. Students love zero hours
2:10contracts. A lot of moms love zero hours
2:13contracts because they want the
2:14flexibility not to have to come in on
2:17school holidays. I don't think you
2:19actually understand that the popularly
2:22the popularity of zero hours contracts.
2:25I think I've seen popularity in people
2:26having some sort of guaranteed income.
2:28But that's um that's that's another I
2:30think when you came to a previous select
2:32committee meeting with the base select
2:33committee you actually committed to
2:35ending zero our contracts at Sports
2:37Direct. You haven't kept that promise,
2:38have you? Yes, I've absolutely kept that
2:40promise because we went out, we surveyed
2:42the workforce, we said, "What would you
2:44like? Would you like contracts? Do you
2:45have a guaranteed 5 hours or a
2:48guaranteed 15 hours or a guaranteed 25
2:51hours? Whatever it is, go down, tick the
2:54appropriate boxes, and the vast
2:56majority, and I'm going to get this
2:57figure wrong now. I'm going to say 80%,
3:00but that'll be the wrong figure. So,
3:02let's go safe." 70% of people said, "No,
3:05we like the complete flexibility."
3:08You're wrong.
3:10Simple as that. You're wrong.
3:11Those that didn't want the flexibility
3:13couldn't have the guaranteed income.
3:15Are we going to go round and round on
3:17the same thing? I can only do it for the
3:20vast majority. I can't get every single
3:24little thing right. It's not possible. I
3:27had to say the committee last time, I I
3:30know I'm ultimately responsible for
3:32every action of every person in the SDI
3:35group, but in reality, it's impossible.
3:38It would be like in asking the policeman
3:39for every burglar he personally was
3:42responsible. It's not possible. We can
3:46only do things on the vast majority. If
3:48the vast majority want something, that's
3:50what we give them. It's as simple as
3:52that. Well, I think some employers
3:54manage to have different contracts for
3:56different employees. But but over to you
3:58now.
3:59Yes, Mr. Ashley. Uh I'd just like to ask
4:01a simple question for the staff that
4:03you've taken on from House of Fraser.
4:06Yeah.
4:07Will you be maintaining their current
4:08contracts of employment and the
4:10conditions and will you be recognizing
4:13the trade unions?
4:14Okay.
4:15That they were in.
4:16So first of all, you've got to
4:19understand that House of Fraser. Do you
4:21agree it's got to be a totally different
4:22business to what it was?
4:24Do do you agree it's got to change.
4:26That's where it went bust. It went bust
4:28because it wasn't it wasn't right what
4:30was being offered.
4:31Yeah.
4:31So therefore you have to say we have to
4:34change things. We have to change things.
4:36And guess what that may be? We don't
4:39have as many people because everybody
4:42knows you went in the house of Fraser
4:43and it was like nobody was in there.
4:45Yeah. The only people were in there was
4:47sometimes appeared to be the staff.
4:49Yeah. So you got to say, okay, maybe
4:51they got their staff ratios completely
4:54wrong to the modern day demand on high
4:57streets. So you say, well, are you going
4:59to guarantee every single person? I I
5:01will tell you now. You can ask me the
5:03question as many way as you like. No,
5:05cuz I can't. It's impossible what you're
5:08asking me to do. It's It doesn't make
5:11sense. So So I understand in principle,
5:15yes. But you want to say every last
5:17person, every last every this this this
5:20this. It's impossible for anybody. And
5:22if they sit here, anybody, and says they
5:25can,
5:27I don't believe them. I literally don't
5:29believe them. Otherwise, they won't be
5:31sat here in in 2030 for sure. They won't
5:34be sat here in 2020. That the high
5:37street has to change what it offers the
5:41consumers. Therefore, what people were
5:44doing before will not be right now and I
5:47can absolutely guarantee you will not be
5:50right in the future. I can guarantee it.
5:53So, we understand and we'll hear more
5:55about what your views are on the future
5:56of the high street. But what I'm
5:58specifically asking about is those staff
6:00that you've taken on and whether you
6:03will retain their contracts uh as they
6:06are or whether there will be negotiation
6:09with the recognized trade union about
6:11any changes you may wish to bring in.
6:13Okay. So I'm going to answer this again
6:17that the world is going to change very
6:19much and therefore we have to look at
6:21House of Fraser and any other business
6:24that we buy including SDI itself and it
6:28has to change. It's constantly changing.
6:31Yeah. So that is my answer. I do not
6:34want to be put in concrete boots by, for
6:38example, and I don't know if they are,
6:42prehistoric
6:44practices that are not relevant for
6:47today's retail consumers. Say a stores
6:50used to open at 9:00.
6:53There's no customers on the high street
6:54at 9:00 anymore. Say stores need to open
6:56at 12:00. Now, that would that person's
6:59contract would have to move. Maybe
7:02shoppers want to come in and pick up
7:03their internet parcels after work. So
7:06whereas a store used to chat at 6:00 or
7:085:30, maybe it needs to stay open later.
7:12Just think about it. Yeah. Stop trying
7:14to showboat and ping me down here
7:17because that's what you're here to do. I
7:20thought we were here to talk about
7:21saving the high street, but clearly not
7:24that. So that that answers your question
7:26as fairly as I can. Well, I'm not
7:28entirely sure that it does answer my
7:30question, but I've heard the response.
7:32The one thing I haven't heard is any
7:34reference to the trade unions.
7:35Okay. So, so, so, okay. Okay. Okay. Give
7:39me one second. Let me get my glasses on,
7:43right? Trade union. Now, we all know I
7:47was here before and we all know that
7:51um I was very unhappy with Ian Wright um
7:57with his links with Unite. I don't think
8:00it's right that he had received money
8:04from Unite. I think that makes him
8:06conflicted. I think that puts Unite in a
8:10very difficult position. And by the way,
8:12I'm not against unions. That's the funny
8:14thing. Yeah. the the the odd thing is
8:17you you keep arguing against the person,
8:18it's actually for the people. But
8:20anyway, let me just read you this. Steve
8:24Turner obviously of Unite. This is when
8:27it came to Sharbrook and he went round
8:29with three people, four people. It was
8:32the agencies we were after. We had to
8:36get you in order to get the agencies. He
8:40repeated, "Our problem is not with you.
8:43It's with the agencies. We can't get to
8:47them. So, we had to come after you.
8:51That makes negotiations with the union
8:54very difficult. I understand what the
8:57union's problem is. They need to fix the
8:59deal over here. And you know what? If
9:02I'm the perfect pantomime villain, post
9:04the void to pick on, it's part of the
9:07process. Okay? But when you then say to
9:10me, "Work with a union," I've got to
9:12make sure that they don't want to make
9:14me the pantomime villain again, their
9:17poster boy for everything that's bad,
9:20cuz I'm not. And I don't know of any
9:24other retailer that paid out voluntary
9:28all the way through the group. Every
9:31single full-time person shared 250
9:37million in super bonuses. Not normal
9:41bonuses, super bonuses.
9:44Think about that.
9:45Okay, let's move on then. Have you got a
9:48supplementary or do you think it's okay?
9:50Okay, Tam, can we move on to your area?
9:53Um, thank you very much, Mr. Ashley. Um,
9:55in terms of what you just said, let's
9:56just dwell a bit more about zero hours
9:59contracts. Uh I know that um what you've
10:01intimated is that the majority of the
10:04workforce whether that's that sports
10:05director and uh and that you'll no doubt
10:08be doing surveys for House of Raser as
10:09well that the majority of them want to
10:12remain on zero hours contracts but the
10:14evidence that the likes of us have got
10:16in terms of interactions with unions or
10:19staff is that they are extremely anxious
10:21about zero hours contracts and the race
10:23to the bottom. Now the g given that
10:26scenario in terms of the stores that you
10:28will have on the high street uh or you
10:30know or elsewhere would you reconsider
10:35uh in terms of employing those people
10:37not on zero hours contracts but with
10:39proper contracts with that security of
10:42work. We do do you know how many people
10:45we take from zero hours contracts and
10:48they work their way right through the
10:49company all the way to the top. It's not
10:52a thing. If you're on a zero hours
10:54contract, you then don't you you you
10:56would be the first in line to be offered
10:58a full-time contract. Think about it.
11:00Cuz we already know you. We've already
11:02worked with you. You already stand how
11:04our processes work. It's it's a it's a
11:07fantastic stepping stone on the way up.
11:10It's it's a total positive. And I can't
11:14I'm going to say it again, but all I get
11:16the sense is that people want to pick
11:18things because that's a political hot
11:19potato. Zero as contracts. They're so
11:21terrible. They're draconian. They're
11:23this. They're that. They're not perfect.
11:26I never said they were perfect. I said
11:28in lots of circumstances, they are
11:31absolutely fit for purpose. And what's
11:33more, think how many people have come
11:35through I should probably do a survey at
11:38Sports Direct to find out how many
11:40full-time employees have come through
11:42zero contracts. The truth is I don't
11:45know the answer off the top of my head.
11:47I just know that I meet people and when
11:49they when this sort of debate comes
11:52around, they say, "Do you know I started
11:53on zero contracts, Mike? Do you know I
11:55started on zero contracts, Mike? Look
11:57who I am. I'm running head of transport.
11:59I'm this. I'm that. I'm manager XY Z.
12:02Our most successful manager, as I
12:04understand it, start in the store,
12:06started on zero contracts. It's been in
12:08the public. It's been in the press. It's
12:11not a secret. Why do you can't make it
12:14such a negative thing?"
12:15Okay. Literally I will commit to if the
12:18majority of people don't want zero hours
12:20contract then we should do away. Let's
12:22move on in terms of House of Raser. When
12:25um you took charge of that you've said
12:27that you're going to turn it and I quote
12:28into the Harros of the high street uh
12:31and you're hoping to keep about 59
12:33stores open. Now there are many uh
12:35around the country that are anxious in
12:37terms of uh store closures. What factors
12:40would you take into consideration or or
12:42will you take into consideration when
12:44deciding on whether to close a store?
12:49Please, it is not possible you call me
12:51here today and quote that I said I'd try
12:54and keep 59 stores open. I never never
12:58never
13:00said that. And you know it. This group
13:03here doesn't know. I never said I would
13:08keep 59 stores open. Never. Never.
13:11Never.
13:12Well, I've got a direct quote from
13:13yourself. You You wanted to turn Harrods
13:15into the uh you know the House of Raser
13:18into the Harolds of the High Street and
13:19hope to keep 59 stores open. So
13:21as many as the 59 and everybody knows I
13:25set a target of 80%.
13:29Everybody knows they set a target of
13:3180%.
13:32What person could keep 59 stores open
13:36besides God? It's impossible. It can't
13:39be done.
13:41But why do you want to drag me to these
13:43committees and try and get me to commit
13:45to things that can't be done? There's no
13:48point. Let's be realistic. If I manage
13:51to save 80% of them,
13:53by the way, that might be a god-like
13:55performance. And before anybody says it,
13:57I'm not comparing myself to God.
13:59Okay. Brilliant. Uh I I don't think
14:02anybody else on the committee uses it
14:03either. But um so just to answer the
14:06question, what factors would you take
14:08into consideration when deciding whether
14:10to close a store?
14:11So first of all, it's lots. So let let's
14:15talk about a store. What what time frame
14:17are you going to give me for keeping a
14:19store? 3 months, 6 months, a year, a
14:2210-year lease, a 15-ear lease? What time
14:25frame? What to give me an idea of the
14:28time frame?
14:29Look, I'm not here to answer.
14:31understand. So now you understand the
14:33complexity of the answer because I if I
14:35give an answer like that everybody will
14:37say you said that I go well that's not
14:39of course I didn't mean that be
14:41realistic so you say okay so Glasgow
14:45well have you committed to keep the
14:46number one store open phrases in Glasgow
14:49yes how did you manage to do that we
14:51bought it so by definition we committed
14:54£100 into phrases of Glasgow so you you
14:58can then invest in the store What
15:00happens in stores that you therefore
15:02can't can't
15:05buy for whatever reason that makes them
15:07very difficult to invest in. What
15:10happens if you have a landlord that
15:12wants it for development for something
15:14else because they're going to make a
15:16fortune if it turns into uh flats,
15:21uh service business offices, everything
15:24else. A lot of the property has got a
15:27lot of value for other uses. And it's
15:29not easy to keep it as retail. And
15:32everybody wants to say greedy landlords.
15:34I accept some landlords are being
15:37greedy. But the vast majority of
15:39landlords want to sit down and work
15:42something out. They do. But then we get
15:45into time frames, investments, how we're
15:48going to do it. What happens if you if
15:50you have a store that actually in fact
15:53the whole high street dies around it?
15:55What are you going to do with the store
15:56then? because I said, "Okay, I'll sign a
15:5810-year lease. It's not she's not going
16:01to help in the end. That might bring the
16:03whole business down." I said to before
16:05to the previous committee, "I'm not
16:08Father Christmas. I'm actually a very, I
16:11believe, fair guy. I try and be fair. I
16:14try and be balanced,
16:16but you can't get me to predict a number
16:19with all the different variables going
16:22in other than why wouldn't I want to
16:24save them? Okay.
16:25What advantage have I got closing
16:28going to empty stores? Uh we had Bill
16:30Grimsey uh who presented evidence uh to
16:34the committee earlier this year in terms
16:36of how empty stores are a massive scar
16:40uh on our high street and in terms of
16:42you know the huge void that they leave
16:44behind. So do you worry um you know late
16:47at night about the impact of closing a
16:50store on the health of the high street
16:53in which that store is situated?
16:55But why why do you ask me late at night?
16:57Why didn't you say on a Monday morning
16:58or during the normal working day when
17:01I'm supposed to be considering these
17:02things that's when I think about them
17:04whatever time of day whether it's and in
17:06the right environment with the right
17:08people. So, I'm sat with property. I'm
17:10sat with HR. I'm sat with buying. It's a
17:14whole group shop fittings. It's a whole
17:16group of people that make those
17:18decisions. I said last time, I'm not
17:21sitting in my office stroking a white
17:23cat. So, let's assume I look at all of
17:26those things.
17:27Yeah. You think it's funny? I don't. I I
17:30find it very frustrating. Again, why
17:33would I What benefit have I got of
17:35closing stores? And let's get on to
17:37this. Why are why are so many stores
17:40empty on the high street? Why are they?
17:43So, do you wor The question is, do you
17:45worry about the impacts of store
17:47closures on the high street?
17:50I'm a retailer. Of course, I worry about
17:53the state of the high street.
17:54That's all I want. I just wanted to ask
17:56by definition I would worry about the
17:57state of the high street.
17:58Finally, just allowing other colleagues
18:00to come in. Uh do [snorts] you see the
18:02uh you know in terms of mitigating the
18:04harmful impacts of uh a store closure on
18:07the high street as part of your
18:09business's co corporate social
18:10responsibility?
18:12Of course not.
18:14Of course not. It's not my fault the
18:18high street's dying, is it? It's not
18:20house of Fraser's fault. It's not Mark
18:22and Spencer's fault. It's not
18:24Debbenham's fault the high street is
18:27dying. It's very very simple why the
18:29high street is dying and you all know
18:31the answer but we have to say it. It's
18:34the internet. The internet is killing
18:36the high street. I know we have a400
18:39million pound internet business.
18:42That's400
18:43million. Guess what that affects the
18:46most? The high street by definition. The
18:49question is what to do about it. If you
18:51want to save the high street, you have
18:53to address that problem. It's as simple
18:56as that.
18:57Okay, Mark.
18:58Chairman, thank you.
18:59Well, let's do that. Let's look at the
19:01future.
19:01Okay.
19:02What's your vision for the high street
19:04in 2030?
19:05No. No. I we I wouldn't even go to 2030.
19:08I would like I've already thought about
19:10this. I would like to bring that here
19:11today. Now, I want to make it crystal
19:14clear. the mainstream high street as we
19:18think about today, not not the not the
19:21Oxford streets, not the the not the
19:23Westfields, the mainstream high streets
19:27are already dead.
19:30Dead. They can't survive. Their patient
19:34has died.
19:36Now mainstream, that's the that we're
19:40talking about the majority.
19:42Now, what we're going to talk about is
19:44could we save the vast minority? What
19:48can we do for them? Because some of
19:50those other high streets, the decline
19:52has happened. I'm It's not retailers
19:55fault they have to come out of high
19:57streets. They have to come out of high
19:58streets not because they're making money
20:00because they're losing money. And people
20:02then get very confused about losing
20:04money. You you lose money even on a bit
20:08of paper if it says, "Oh, look, this
20:10store's profitable." Accountancy wise,
20:12it might be, but it doesn't allow for
20:15central overheads. You must look at a
20:18store's profitability
20:20after central overheads. I promise you,
20:23somebody has to pay to get
20:25[clears throat] the goods to the store.
20:27Think about it. We say, "Oh, this store
20:29was profitable." Yeah, but we didn't
20:31allow anything for central overheads.
20:33Well, how would it survive if it didn't
20:35have a warehouse supply, an HR role?
20:38Think about it. It's impossible. So you
20:40have to look at it after central
20:42overheads. The vast majority of the high
20:46street therefore has already died dead
20:50in the bottom of the swimming pool dead.
20:52Okay. So how do you resuscitate it?
20:55That person's died. Okay. Now I said the
20:59vast minority of the high street. This
21:02person besides the top 20% is
21:05flatlining. They're on the operating
21:07table. They're flatlining. you got a
21:10problem. The only thing you can do is
21:12try and give them an a massive electric
21:13shock. And
21:14what is that?
21:15It's very simple. [clears throat] And by
21:17the way, the Sports Direct Group
21:20will not thank me for saying that. You
21:22have to immediately tax the internet.
21:27Not and I I don't mean just the pure
21:30play internet. That's why I say the
21:32Sports Direct Group will not thank me
21:34for this. You have to tax the internet
21:37for the good of the high street, the
21:40good of the all. So if you turn around
21:43and you said, okay, as a as a minimum,
21:46and I don't mind if it started in 6
21:48months time because that gives all
21:51retailers a time to adjust. You've got
21:54to tax the web boys 20%. But that, by
21:58the way, that will affect me massively.
22:00I've just told you I've got a 400
22:01million pound business. So that's that's
22:03going to be a big bill unless what?
22:06Well, think about what would be fair and
22:09think about what you want to achieve.
22:11You want to save the high street. Okay,
22:13you accept that if if the high street
22:1620% was not savable. 60% is in a
22:21terrible terrible mess as we speak and
22:2420% like the sort of super elite and
22:26Oxford streets and that survive anyway.
22:28But in my opinion, that's not really the
22:30high street. Oxford Street isn't high
22:32street. It's not really relevant. So
22:34what you're then trying to do is trying
22:36to save the majority of this 60%. And
22:39you've got to do some really really
22:41simple stuff and say, "Right, okay. What
22:44happens if more than 20% of your
22:46turnover
22:48uh was on the web?" You go, "Oh, you got
22:52to pay the 20% then. Oh, that'll make it
22:54harsh." Okay. Why would you put in a
22:57band of 20%. plus minus people say
23:01currently the web is 20%. That's what
23:05they say and they say it's going to go
23:07to 40%. That's what they say. So let's
23:10assume that the 40%
23:13is not the right figure. It's somewhere
23:16between 30 and 50%. It's what's going to
23:20go to very simple. If I'm a retailer and
23:23I'm the SDI group, I will make sure not
23:27to pay the 20% tax, I keep 80% of my
23:31revenues going through the high street
23:34because I would because I'd stop closing
23:37three stores into one or two stores into
23:39one because I would say no, it now makes
23:43perfect business sense for me to cross
23:46subsidize those stores and keep them
23:49open. And what's more, what I'd like is
23:52is if we have click and collect through
23:56the high street stores that acts as a
23:59credit. In other words, that that helps
24:01against your 20%. It means SD group
24:05would would then look to keep as many
24:09stores open as possible because it knows
24:11this internet business is coming. And
24:13what's more, would not only reinvest in
24:16old stores instead of closing them.
24:18Guess what? I bet it would go on an
24:20opening spree.
24:21That's very helpful and it's useful to
24:23understand the nature of that sales tax.
24:25But just looking at the other side of
24:27it. So those dead high streets that
24:29you've described and you know we've seen
24:30it in evidence.
24:31Yeah.
24:32Um
24:32what do we do for them?
24:34Okay. So let's assume you you you you
24:36you but you you you have to do the the
24:39the things you it's it's my uh answer is
24:43based on the fact that you've done the
24:4620%
24:48web tax. It's that's basically done.
24:50That's about competitiveness. Yeah.
24:52Yeah. Yeah. Yeah. So so that that that
24:5320% is done. Now, a a Sports Direct
24:57group is desperate then, desperate to
24:59keep 80% of its sales on the high street
25:02because it doesn't want to slip into the
25:0481% ban and pay the tax. It will then
25:07look to open stores in places just like
25:10you're talking about. And how would you
25:12get an SD to open stores? you would turn
25:15turn around to an SD and say look if the
25:19council and by the way the council have
25:21to agree to this gave them free rates
25:24for 5 years on the condition that SD
25:30matched every pound of free rates with a
25:34pound of investment that has to just go
25:37in that site.
25:40All of a sudden, you got an empty store.
25:43The rates are going to be collapsing
25:45anyway because by definition, all the
25:47empty stores are bringing all the rents
25:48down which are bringing all the rates
25:49down which bring back the income anyway.
25:51Now, we've got to turn it and force it
25:53the other way. So you say well look if
25:56we put in that five years there and an
25:58SDI by the way could equally be Marks
26:01and Spencers
26:03could be debums could be any retailer
26:06that you say the council tick that
26:09that's worth them having because they
26:11have to decide
26:12the retailer has to agree to put pound
26:15for pound of rate savings match them and
26:19invest them. So no free ride for the
26:22retailer. The landlord would have to
26:25agree to say a 25% reduction in rent.
26:29Why? Because why should the council not
26:31get anything and they get the full
26:32rental value? That's not fair. So you
26:34suddenly get the council agreeing, the
26:38retailer agreeing, the landlord agreeing
26:41and then you get well if if you're for
26:43example um a public company you you can
26:46also say but the public company has to
26:49agree to have a say 25% reduction in
26:53dividend. So the stakeholders or the
26:55shareholders of that company there
26:58everybody has to put in and if you don't
27:02if you don't sort of help retailers like
27:04me very simple force me because you
27:08watch us reinvest because we have to
27:11because we need to keep 80% of our trade
27:14on the high street and simultaneously
27:17you've leveled the playing field with
27:19the internet the web guys simultaneously
27:22one big knockout punch. Will it be
27:25perfect? Absolutely not. Will every
27:27percentage be right? No. Will somebody
27:31cheat the system somewhere? You're not
27:33kidding. Cuz people cheat. That's what
27:36businesses do. Some accountant somewhere
27:39find some way of fiddling the numbers.
27:42not actually spending the money on that
27:44store because they gave it away as a
27:46design fee because actually in fact that
27:49store we put down 500 grand for a design
27:51fee because it wasn't for that store it
27:53was for 10 stores or 20 stores so you
27:56have to put draconian measures in around
27:58an in uh uh like an incentive like this
28:02you have to turn around to to to an SDI
28:05group and I don't care by the way I'll
28:06sit next to Mark and Spencers I'm quite
28:08happy saying if you fiddle for every
28:11pound. You fiddle, you're going to get
28:13a10 fine. Very simple. It's 10 to one.
28:17It's 10 to one. Don't fiddle the
28:19council. It's not fair. Yeah. Their
28:21money is not free. 10 to one fine. Love
28:24it. I would therefore make sure that I
28:27was I was only claiming 90 instead of
28:29£100 or 95 because I want to I don't
28:32want to go near that edge. The the
28:34accountants that audit those figures
28:36because they got to be submitted to the
28:37council. They got to be fair. Well, they
28:38can have a pound. So the retailer can
28:40have a10 pound fine and for for every
28:43pound that's wrong and the auditor can
28:45have a pound fine because you know half
28:47the time the auditors do these things
28:48and come up with these methodologies and
28:50everything else and they create this
28:51money and this thing and everything else
28:53and nobody quite understands it. So you
28:55got to be draconian. What else would I
28:57put in? Well, I'd put in for any
28:59executives of the retailer I if if it's
29:03perpetual abuse, you can give them a
29:05custodial sentence. And what's more, why
29:08don't you extend it to the non-execs?
29:10Because what I see in life is too many
29:12people on the merrygoround, the problems
29:14on somebody else's shift. And what
29:17people do is because they move around.
29:19It's like you've been given this short
29:21time window to make a difference. So you
29:23really don't care about the next person
29:25coming in because everybody says in
29:27business rotation's great, this that
29:30people get old, they get stale, they get
29:32that needs freshening up. So you get
29:34this very much short termism that makes
29:38it impossible for a group like this to
29:41actually make a difference on the high
29:43street. I'm telling you plus minus
29:45impossible. I think you've got an
29:46impossible job. That's why I sort of
29:49came sort of sort of some self sort of
29:51confession to say I'll tell you how I
29:54would deal with an SBI the same as an
29:56M&S and that's how you will get us to
29:59invest. force us stroke help us the
30:03combination the carrot and the stick and
30:06people like SDI will step up to the
30:08plate and you will then be we would
30:11never never never want to become
30:1521% online. Why? Because we'll be
30:18subject to the tax. So we're going to
30:20make sure we keep it 80% in the high
30:22street. And by the way, click and
30:24collect. We're going to make sure people
30:26go to the high street to pick up those
30:28parcels. They don't deliver them at home
30:31because it pays us to. And if we have to
30:33give them gift vouchers to come in the
30:35store that they get to spend, guess
30:38what? They're then going to come in the
30:39store. They're then going to visit the
30:41high street. But you guys, you have to
30:43do more. You have to do free parking.
30:46I'm not talking about Oxford Street. I
30:49don't care about Oxford Street. We all
30:52pay millions and millions in rent there.
30:54I'm talking about high streets as your
30:55evidence that are barren, that are
30:57deserted, that are closing and you still
31:00get some towns that charge for parking.
31:04Therefore, you've negated the whole free
31:06click and collect, get a voucher because
31:08they've got to pay it all away in
31:10parking fees. Everybody, which is
31:13impossible, has to come together and
31:15look at it on this kind of scale. I know
31:18sounds very socialist. I did say
31:20earlier, I'm not this crazy capitalist
31:22that everybody thinks I am. I'm
31:24genuinely not. And I think something
31:26like that, if you really delivered it
31:29and you make and you really, not being
31:31I'm the perfect character to talk about
31:33this, shone the light on the bad boys,
31:36but also why can't you shine the light
31:38on when somebody does something right
31:40and something well and hold them up and
31:42hold some of the councils up? Cuz some
31:44of these local government authorities
31:46with Hoff, just so we're clear, have
31:49really, really worked hard to help us.
31:52They've been on the phones. They've been
31:54saying, "We want to meet you. How can we
31:56help? Let's have a conversation." And
31:58you're thinking, "Okay, there'll be a
32:00time for this. Let's get the waters
32:01calmed down. Let's get the warehouse up
32:04and running. Let's get the internet
32:05going. Let's get the the shortterm
32:07leases solved. Now, let's sit down with
32:10the land and say, "Do you want us to
32:11co-invest with you? How do you want to
32:12do it? How can we make things better?"
32:15And the councils, people don't they they
32:17don't get enough credit. I mean,
32:19everybody think I'll be a G Kate's
32:21councils. I don't know why, but the
32:22councilors I've met know their numbers
32:24inside out and they genuinely care.
32:27That's their city. That's their town.
32:29Thank you for that. I mean, just briefly
32:31on from a business point of view, I
32:32mean, a lot of people say that, you
32:33know, the department store is dead.
32:35Yeah.
32:36You clearly don't agree because you've
32:37just bought into one.
32:38Yeah.
32:38How do you buck the trend?
32:40I haven't just bought into one. I bought
32:42into Hoff like six, seven years ago. And
32:45I also did Deboms about five years ago.
32:47Started buying estate. What I believe in
32:49that the the concept of the department
32:51store is actually correct. If you think
32:54about it, you get everything in one
32:55building. What happens with department
32:57stores in my opinion is they actually
32:59have a bad offering plus minus nearly
33:01everything. So if you can get retailers
33:05to take the right amount of space in a
33:07department store like a sports direct in
33:10in in a house of Fraser but elevated
33:12because it's House of Fraser Harrods of
33:14the High Street. All of a sudden,
33:16everybody wants to go to get their Nike,
33:17Adidas, whatever brands they want to go
33:19there. So, I don't believe that
33:22department stores are dead. I think they
33:24have to evolve. They have to be
33:25different. It's not about just a sea of
33:28clothing anymore. It's about why
33:31wouldn't you put on the top floors of
33:33department stores free gaming? And and I
33:37mean computer games, just so we're
33:38totally clear. Do you know what I mean?
33:40That drags that generation through the
33:42store. What does it cost to set up? The
33:44top floor of that department store was
33:46losing money and not taking anything.
33:47Anyway, you see in Curry's PC world. I
33:50don't know if you know, but you go in
33:51and they got this free gaming going on.
33:53I think it's a brilliant idea. Now, that
33:55affects the young people into the store.
33:57And by the way, gaming, the average game
33:58is like 31. So, they're not like 12 as
34:02people imagine. They're actually adults.
34:04So, all of a sudden, you should you're
34:05creating a place where somebody goes
34:07because they need to go and they
34:08interact and there's something there.
34:10All they don't want to do, not being
34:12rude, is ripped off the park to go
34:14there. And you suddenly get the people
34:16coming. And guess what? Say, so for
34:19example, let's assume um I'm going to
34:21say it the other way round. Let's assume
34:23that uh my wife is an avid gamer and I'm
34:26not. Yeah. Therefore, we ended up going
34:29to the department store. She goes and
34:30does the gaming and I wander off around
34:33the department store, have a cup of tea,
34:35buy something like that. That is the
34:38sort of thing that can change department
34:40stores. What they are stuck with is
34:44uh prehistoric rents that are no longer
34:46correct and they aren't. And that's why
34:49landlords have to take their share of
34:51the pain because it it was from the
34:53rents were set pre the internet, pre the
34:55web, they're no longer relevant. And not
34:58being rude, but but the business rates
35:01are based on those and it's madness. So
35:04that's what killing department stores.
35:07The guys at Devonhams suddenly didn't
35:09become bad retailers overnight.
35:12Debonhams is is a good business. It just
35:14can't survive on the the the rent and
35:17the business rates it's paying. And it
35:18probably can't survive on the amount of
35:20people it has in the store. Probably
35:22can't probably has to be more
35:24self-service, more self-service tills,
35:26more this, more that.
35:29House of Fraser, it it will elevate
35:32itself to a more luxury offer. So it has
35:36a different role to play in the high
35:38street. They all have a different role.
35:40House of Fraser's role is to bring
35:42luxury to the high street. That's what
35:43his role is.
35:44Thank you. Okay. How do you get a quick
35:46follow?
35:47Yeah, just very quick. Thanks for
35:48coming. I've been trying to meet with
35:49you since the 22nd of August as it
35:51happens. Um just interested sports
35:53threat international. You have premises,
35:55businesses and other countries and they
35:56doing other countries doing this better
35:58in terms of adapting to the internet
36:01challenge in policy.
36:05I have to be honest not not particularly
36:07I the UK is quite and is quite known
36:10fact it's quite ahead on the web. We we
36:13adopted the web very early in the UK. So
36:16so we we actually got ahead of a lot of
36:18our European if you like uh stores and
36:22that sort of thing. So we're a little
36:24bit further down the chain. So I think
36:26the decline in European high streets and
36:28stores and everything else will just be
36:30the same but just a few years later.
36:33Okay. Thank you. Okay. Three.
36:36Thank you. Mr. Ashley, you mentioned
36:38business rates. What proportion of your
36:40turnover um do business rates amount to?
36:43Of our turnover? Um uh something I'm
36:47going to say something like uh 3%
36:49something like that. Two and a half%
36:513%. And you mentioned one of your ideas
36:53is to have a sort of holiday from
36:55business rates for about five years.
36:57Yeah.
36:59How do you think councils will manage to
37:01provide the services they need without
37:02those business rates? What do you think
37:04they do with that money now?
37:05No, no, no. So, so let's be crystal
37:07clear and I totally agree with you. So,
37:09we're on totally the same page. That is
37:12because you tax or whatever you would
37:15like to call it 20% the web. You have to
37:18get that money in first before you can
37:20give any back. Yeah, this isn't a case
37:22of oh, I understand the councils don't
37:25have the money. I'm not under any
37:27illusion. I have met a few of them and
37:30that they are very uh they do a very
37:33good job of managing their budgets. Can
37:34I put it like that?
37:35Okay. So, but when you talked about this
37:38um tax on internet sales,
37:40Yeah.
37:41you're talking about So, let me make
37:44sure I understand you. So you've got a
37:46business where some of it's on the
37:47internet, some of it people come into
37:49stores and buy. Yeah.
37:50So you're saying where it was where
37:51things were bought through the internet,
37:53you would pay an extra layer of like
37:56corporation tax, but it would be like a
37:57sales tax with a VAT.
37:59Correct.
38:00But how will that compete with companies
38:02that sell from abroad and offshore? You
38:04wouldn't. And there's a massive number
38:05of those that don't pay the level tax
38:08that you're talking about. So how would
38:09that help?
38:10So it's very simple. In in theory, you
38:13can tax them from abroad. Would you say
38:14if you make the sale in the UK?
38:16Yeah, in theory. Yes. Yes.
38:17But it doesn't happen at the moment,
38:18does it?
38:19Yeah. Well, in in it does because we you
38:22you if you're of a certain size, you
38:24have to elect where to pay the VAT or
38:26the tax. So, all you simply say it's
38:28it's an additional one to the VAT and
38:31they have to elect to pay in the UK on
38:34goods that sold in the UK. That's it.
38:36Okay. So that would need a change in in
38:39quite a lot of tax law to do that at the
38:41moment because at the moment you've
38:42almost got like a transfer pricing thing
38:43where correctly. Yeah. Okay. So what
38:47so you think a sales tax rather than
38:50maybe a purchase tax an internet so
38:53someone who buys something from your
38:54store on the internet would it not be
38:56easier for them to pay like a penny
38:58tax themselves and it be collected in
39:00the way VAT is? Do you not think that
39:02would be better?
39:03No. Because I I I think what you want to
39:05do is you want to get you want to you
39:06want to get retailers saving the high
39:09street. So So what I said was
39:11done a very good job so far, have they?
39:13No. No. Yeah. No, no. Um but is it
39:16really the retailer's fault? I I mean
39:18I'm a retailer and we we would have
39:20probably said at one time and this is a
39:23real live example. Maybe we would have
39:25said I don't know we could have had in
39:28the UK 800 stores. We probably got to
39:33five or six hundred stores and it would
39:35have been at that time when we floated
39:38that because it was really before the
39:39web was really conceived as a threat
39:42to look to get up to that kind of
39:44number. Now you look and you say
39:47maybe half that number maybe 250
39:51300 the 5600 is actually have it's not
39:54gone up it's swung the other way. That
39:56is not a retailer's fault that mobile
39:58phones came in. That's not a retailer's
40:00fault that the web came in.
40:02But the point of retail, people are in
40:04business.
40:04Yeah.
40:05They take the risk, they take the
40:06profit, sometimes they take the loss. So
40:08being in business means you've got to be
40:10adaptable.
40:11Yeah.
40:11So it may not be the retail retailer's
40:14fault. But what you're saying, it's the
40:16fixed costs of rent and business rates
40:19that holds back the ability for retail
40:22to adapt. Is that what you're saying?
40:23Yes. Correct. Because it was set at a
40:25different time. But what I'm saying is
40:27so crystal clear is that if a retailer
40:30keeps its its internet under 20%,
40:34it doesn't pay the tax.
40:36But then you've got companies that are
40:38completely internetbased.
40:40Yeah. Well, they have to pay the tax
40:41then. That's very fair. They they they
40:43have to pay the tax. Yeah. Because
40:46otherwise the high street couldn't
40:48possibly compete with the
40:51internet. It'd be impossible.
40:52So, okay. Just to clarify what you're
40:53saying is this idea of having an
40:55internet sales tax for businesses that
40:57are part store [clears throat] or
40:59whatever that can only actually work if
41:02we actually look at the Googles of this
41:04world and the Amazons and the people who
41:06Okay. So as the way the tax law is at
41:09the moment it's not because earlier you
41:10said it's very simple but it's actually
41:12not that simple is it? It's quite
41:14the concept is very simple. The concept
41:16of it is very simple. You've got to
41:18drive the people back into the high
41:20street and they should benefit from
41:22going into the high street so they don't
41:24have to pay the tax because that
41:26retailer is providing a service for that
41:29high street, that town, that city. Yeah.
41:32And and that's where your money comes
41:34from. I totally accept councils can't
41:36afford to just be writing checks to help
41:38with shop fits in
41:39because
41:39town centers. I agree with you. I I'm
41:41not disagreeing with you. I'm agreeing.
41:42But ev every big retailer says the way
41:45to fix this is business rates and free
41:47parking.
41:48Yeah. And where's that money going to
41:50come from?
41:50But it's not as simple as that though,
41:51is it?
41:51No. No.
41:53It's actually if you provide what people
41:54want, they'll come and buy it, whether
41:56it's on the internet or in your store.
41:57If you provide an experience like
41:59correct but there's not enough
42:01experiences, [clears throat] if you like
42:03for the big retailers to suddenly offer
42:05overnight, what you've got to do is
42:07you've got to help them by by helping
42:10them help themselves. So if you think
42:12about it, if if you're if what I'm
42:14saying, and I said it earlier, Sports
42:16Direct won't be very pleased with me for
42:18my suggestion, is it's not a a a
42:22necessarily a good fix for Sports
42:24Director as a group. What it is is a
42:26fantastic fix for the High Street. And
42:29we have to realize the High Street won't
42:32make 2030. It's not going to be there
42:36unless you do something really radical
42:39and grab the balls by the horns. It
42:42won't be there. I'm sitting here voting
42:46to punish SDI group. That is not very
42:49normal. Why would I do it? Because if
42:52the high street miraculously
42:55the minority now can be saved in 2030,
42:59guess what? I might have a fabulous
43:01business still. Otherwise, I'm just
43:03going to be end up being a web plat like
43:05the vast majority of the high street.
43:07You really have to grab the ball by the
43:09horns. But now, and you can't put in a
43:12watered down version because a watered
43:14down version won't work. You watch
43:16Amazon open up on the high street. You
43:18watch these pure play boys open up on
43:21the high street then because then
43:22they're going to think, "God, we're
43:24going to have to pay this 20% tax. We
43:26then have to play on a level playing
43:28field with the high street." You watch
43:30the Sports Direct open up stores. I'm
43:32telling you because it has to. You have
43:35to help me or make me. One or the other.
43:39Listen.
43:40Okay. So, we've just talked about
43:41business rates. So, I'd like to turn to
43:43the other element which is uh rent.
43:46So, is rent actually the greater
43:48pressure facing retailers and is it
43:51increasing and what kind of proportion
43:53of turnover does rent represent?
43:55Okay. So if business rates by definition
43:57is 3% plus minus um rent is 6%. It's
44:03very simple because your business rates
44:05are basically half what your rent is. I
44:07have those numbers are very approx for
44:10me. By the way, can we please confirm
44:12that I'm not giving out any inside
44:14information or anything else and won't
44:16won't get in trouble for for just being
44:19open and honest and everything else and
44:20I am in a closed period. So when I'm
44:23talking about the high street, I'm not
44:24talking about sports directs trading.
44:26Yeah. Okay. Sorry. We understand. Okay.
44:28Cool. Cool.
44:30Yeah. So it's about 6%. Uh is that the
44:34greater cost pressure than business
44:35rates?
44:36Yeah. Because one's three and one's six.
44:38It's as simple as that. If if if our
44:40rents h haveved to 3% all of a sudden
44:43our that would that would mean you'd pay
44:46no business rates at all. It's very
44:48simple. Roughly speaking 1316.
44:50Okay. So, um, thinking about the terms
44:53of the lease and the level of rent,
44:55yeah,
44:55where does the bargaining power lie?
44:57We've had lots of evidence about, um,
44:59you know, whether it's greedy, uh, lease
45:03holders or land owners or whether it's
45:05people pushing too hard, retailers
45:08pushing too hard. Yeah. On them. What's
45:09your view of that?
45:13[snorts and sighs]
45:17Landlords and retailers by definition
45:20have always been uneasy bedfellows.
45:22Yeah. The landlord's job is to get the
45:25maximum amount of rent. The retailer
45:28normally wants to pay the minimum amount
45:30of rent. They will both sit in a room
45:33and promise each other everything. But
45:35in reality, when one has the upper hand,
45:37he gets he gets his big hammer and he
45:40bashes the other one. And if the other
45:41one gets the upper hand, he pins out his
45:44hammer and he bashes the other one. So
45:46how would you regulate that? You can't
45:49really regulate what a landlord is able
45:52to charge you in rent if you are and I I
45:54just say it again in Oxford Bond Street.
45:56Let's look at a different street Bond
45:58street. Who feels sorry for any retailer
46:01on Bond Street? Well, I don't. Yeah, I
46:04certainly don't feel sorry for any
46:05retailer on Bond Street. And if those
46:08landlords are able to charge them tens
46:10of millions of pounds a year in rent,
46:12good luck to them because they're able
46:15to pay it. So, but that's not the case
46:19when you've got somebody who has signed
46:22leases with only upward rent reviews in
46:26many, many years ago and those rents
46:28have collapsed. It's how do you help
46:31those people when when in 2006 you and
46:35Mike Stein for a store that was worth
46:3750,000
46:38rent and by the way that was probably a
46:42good deal and now it's only worth 10.
46:45What happens? The retailer goes bust the
46:48stores closed and it causes it implodes
46:51on itself. It's a downward death spiral.
46:55It's unbelievable once it gets out of
46:57kilter. If it's always going up, even
47:00gradually, the system works. The rent
47:03review process, all you have to do is
47:05get a couple of potty retailers. For
47:08whatever reason, their business is on
47:10fire. McDonald's years ago, McDonald's
47:14wants to rent a site. Well, they're
47:15going to make a fortune. They can afford
47:16to pay anything. Another retailer comes
47:19along, an SD, I'm not being funny,
47:22SD 15 years ago often used to set the
47:25record rents. Often. Why? Because plus
47:29minus it used to make the most per
47:31square foot because it plus minus sold
47:33the most per square foot. People like
47:35M&S and all the big boys were considered
47:37in a in a league of their own. So then
47:40what happens at all the rent reviews
47:42they use these huge record rents
47:44McDonald's and SD set to set everybody
47:46else's rents. For those small retailers,
47:50medium-siz retailers, they were forced
47:52to sign 15, 20, 25 year leases. And
47:57those rents are upward only rent reviews
48:00and they're stuck with them and
48:02therefore they're plus minus stuck with
48:03the business rates off them. So it's a
48:06very draconian system but nobody ever
48:09envisaged the web. I mean even the
48:12famous select committees can't be blamed
48:14for the web. It's not your fault you
48:16didn't do it. [laughter] But it is a
48:18fact of life.
48:19Yeah.
48:20I don't know if I'm making any sense but
48:22I make sense to myself and I make sense
48:24as a retailer.
48:24The situation that we're now in. What do
48:26we do to make sure there's that fair
48:28balance
48:29between landlord and retailer to make
48:32sure the high streets are nice?
48:33But what I what I what I genuinely
48:35suggest is is you you empower the
48:38councils to turn around to the landlords
48:40and they don't forget there was there
48:42was really four if you like stakeholders
48:44in this. There was the local council,
48:47there was the retailer, there was the
48:50landlord and there is the if you like
48:53shareholders in the public company
48:55stroke retailers. So everybody has to
48:58put it in. So, if you signed up
49:00voluntary and I I I I could come to uh
49:03some of the uh places in the UK that
49:06I've come out of because I've been doing
49:08consolidation and making it all more
49:10profitable and less is more and and you
49:12turn around and you say to me, Mike, you
49:14you you got to get some you got to work
49:16with the council. You absolutely got to
49:18work with a landlord. and all of a
49:20sudden landlord goes well I'll give you
49:2225% off and you can then if you use me
49:26which you won't want to do as a role
49:28model because it sounds it's a
49:29contradiction in terms to turn around
49:32and say to this committee okay how
49:34quickly could we see you open up 50
49:36stores you're closing stores you're
49:39closing them you're not opening stores
49:41let's not mess about every year you're
49:44chunking down the stores and you're
49:46shutting these stores that damage those
49:48small high streets the most because
49:50you're not sat in your Oxford streets
49:52and your wherever your bond streets. No,
49:54no. So, I want you to see you reinvest.
49:58But then I'll turn around and I say,
50:00"Well, I want you to commit to doing the
50:04web tax." So, it balances the playing
50:06field because then I got a future. I
50:09know those web retailers have got to
50:10invest with me. They've got to make the
50:13high street work with physical.
50:16Simple as that. So you've got now got a
50:18combination.
50:20Okay. So looking at House of Fraser, how
50:22have you worked with landlords to
50:24renegotiate rent on the House of Fraser
50:26stores that you're keeping open?
50:28Okay. So besides Glasgow that we bought
50:31that we can invest in, we we literally
50:33take them the numbers and and and we we
50:36say to them, you do realize that these
50:38stores lose money and they're well, we
50:41we have information from it was from the
50:43CVA and and and we know it's profitable
50:47and you go but they haven't put any
50:50central overheads in. So if you've got a
50:52house of Fraser Store taking
50:55hypothetically 40 million and making 2
50:58million, they go, "Oh, look, the store
51:00makes 2 million." The landlord's going,
51:01"Well, you could pay the rent. You make
51:032 million a year. My rent's only in
51:06their case would be about 4 million a
51:08year." So, but you make 2 million a
51:10year. I don't need to take my rent down.
51:12You said, "Have you What about central
51:13overheads? What about the trucks that
51:16get it there? What about all the costs
51:17that are central overheads? All the
51:19central marketing, everything. Let's
51:20just say that's 10% of turnover. 40
51:23million makes 2 million. Add on the
51:25central overheads. Oh, it now loses 2
51:29million. 4 million, 2 million, loses 2
51:32million. The landlords are, we don't
51:34believe you. So, I don't believe it
51:36either. There's nothing I can do about
51:38it. That the accountants and why I said
51:41earlier about accountants, the
51:43accountants are nearly able to make any
51:46answer numerically up you want them to
51:48make. I mean they just are. You go there
51:51and well if you applied this you did
51:53this and I did this and you don't even
51:55understand what they're talking about
51:57and they'll go I can make that store
51:59lossmaking or I can make it profitable.
52:02I'll put exceptions in. What are they
52:05when they're at home? It's okay. We can
52:08put an exception in because we're going
52:09to accelerate the shock fit because
52:11we've decided it needs a shot fit. So
52:13all of a sudden that year you can make
52:14that storm make a loss. You can also go,
52:17"No, no, no. These shop fits are quite
52:18wonderful. They're actually going to
52:20last another 50 years and we're going to
52:23slow down the depreciation."
52:25Accountants are able, this is their job,
52:27by the way, to move the numbers about
52:29pretty much at will.
52:30So, the question was how you've worked
52:33with landlords to renegotiate,
52:35but I tell them the truth,
52:36raise the doors. So, what you're saying
52:37is you can make the figures accountants,
52:40correct? And I say to them, I promise
52:42you those are wrong. And if I produce
52:43you, you're going to ask me a prediction
52:45of what I think we're going to take. Why
52:47don't we work on a percentage of
52:48turnover with with a base rent? Why
52:51don't I pay you a percentage of
52:52turnover? So, if I win, you win. It's
52:56quite unique. It's not something that
52:59most landlords like because they like a
53:02they prefer to have a guaranteed income.
53:06But if the alternative is nothing,
53:10then they probably say we'll have a base
53:12rent. And it's quite simple. If you
53:16agree, for example, a 6%
53:18turnover rent, and you say that the the
53:21base rent is 80% of the following year's
53:24turnover. Yeah. You roll it every couple
53:27of years. They're getting their base,
53:29you're getting your 6%. And it's quite a
53:32fair mechanism to put in. And when
53:35landlords begin to realize what a
53:37terrible state Hoff is actually in, is
53:40actually in, not was in, is in, it
53:44begins to dawn on them and the
53:46investment needed to make that store the
53:50Harrods of the High Street. You turn
53:52around to them and say, "Okay, you got
53:53that store now. Make turn over 40
53:56million. Don't forget after central
53:58overheads, it now loses 2 million. It's
54:00100,000 square feet to refit that store
54:03because it hasn't been fitted for 15 20
54:05years. It's all out of date. It's not
54:07what the consumers want. How much does
54:08that cost? 15 million. 150 quid a square
54:12foot. By the way, by the way, if it was
54:15Harrods, it would cost an awful lot more
54:16per square foot. So I said, Harrods of
54:19the High Street, not Harrods, because
54:20Harrods will spend it at least double
54:22that and probably and some per square
54:25foot to totally refit the Harrods store.
54:28Now somebody has to find the 15 million.
54:31That's a lot of money for a store that's
54:33currently losing 2 million. Now you see
54:36the problem. And then you say to them, I
54:38tell you what, we'll guarantee to put
54:39we'll put our money and we'll fit the
54:41store. We'll give you the most amazing
54:43store, but you got to give us the
54:46percentage and you've got to give us
54:47some rent free and help us pay for it.
54:49And then everybody wins. And by the way,
54:51I might have to sign a longer lease.
54:54We are getting to the point where we're
54:56virtually the end of the session.
54:57Okay. Okay. Well, [clears throat] can I
54:59say as well, Mr. Ashley, that I've
55:00written to you as well asking to meet
55:02with you about House of Fraser Metro.
55:04Will you agree to meet with me today to
55:06discuss House of Frame?
55:08No, absolutely not.
55:10Because if I do it for one person, think
55:12of all the other people, then I've let
55:13down.
55:14Yeah. It's People keep thinking I can
55:17just do these one-off things. They're
55:18not easy to do. It's not because I I'm
55:21I'm avoiding the debate with you. What I
55:24would say is right, why don't we get why
55:26don't we get all the people from House
55:27of Fright together all because not being
55:30rude there is how 40 of you. Yeah. And
55:34so I will meet the group of 40. But do
55:36you want to sit in the same room with
55:37the landlords?
55:39Okay.
55:39But but but I I'm happy to turn up. I
55:41bet the landlords won't be very happy to
55:43turn up.
55:44Okay.
55:44Okay. That's something I'd like to
55:46explore with you later.
55:46Okay. As long as it's as a group.
55:48That's enough. That's helpful. It seems
55:50the landlords don't turn up. you will to
55:53that
55:53as long as it's a group I
55:56can pass we'll pass that on to colleague
55:58Mr. Thank you very much indeed. Got a
56:00brief supplementary.
56:02Yes, just just on that. Um it's there
56:03was news over the weekend that there's
56:05widespread expectation that rents are
56:07going to crash in 2019. We'll see a
56:09reduction of maybe 20% as reported in
56:11the Financial Times. M&G and LG LNG are
56:14going to hit be hit quite hard. Um that
56:17would be hopefully good news for the
56:19high street, wouldn't it? And and do you
56:21think that if that is what is trending,
56:24what is going to happen? Yeah. that if
56:27councils and I have a a particular issue
56:29here. If councils actually allow the
56:32landlords to change the purpose the the
56:34the approval on that site to become
56:37residential or whatever then of course
56:39that will keep the the rents up and
56:41actual fact will act against keeping
56:43retail on our high streets.
56:45Right now you're going to make me hated
56:47by every landlord in the country but
56:48you're absolutely correct.
56:51Absolutely.
56:52Go on to council role now finally. Thank
56:55you. And thank you very much, Mr.
56:57Ashley. Um, you earlier on you mentioned
56:59and you talked about local councils have
57:00really tried to help you. So, it does
57:02suggest that there's been um quite a a a
57:05big role for councils there. Just how
57:08important to you is um having that
57:10relationship with councils and working
57:12with councils and and what have you been
57:14doing to try to work more closely with
57:15them? But but but so so so let it's very
57:19difficult for me to to to say it without
57:21naming people and it's not good to name
57:24people because it's always the people
57:25you leave out but exactly what uh Matt
57:29just said there is exactly what has
57:31happened a a huge house of phrases
57:36thought real keys thought and basically
57:39the landlord is well we'll pay a bit of
57:41empty rates we'll keep it empty and
57:43we'll force the council to give us
57:45planning
57:45That council turned around and said, "I
57:48am telling you, you must keep House of
57:50Fraser open. You must make an effort to
57:52keep House of Fraser open. These guys
57:55will help to keep House of Fraser open.
57:57You must get together and you must bang
58:00your heads together and do something."
58:02And what the the council's input made it
58:04happen. Otherwise, that was a a closure.
58:07And sometimes these closures then then
58:10actually don't become closures because
58:12of the council's saying no we're we're
58:15we're we should strongly suggest you do
58:18everything to keep that store. There may
58:20be and let's be realistic the upper
58:22parts of the building could be
58:24residential or something like that. You
58:26know you you could you you you can do
58:28more with the buildings than they are
58:30currently. I accept House of Fraser
58:32cannot cannot cannot have 500,000 square
58:35feet in Birmingham. I mean, 500,000
58:39square feet. I mean, honestly, you would
58:42need a you would need an Uber to take
58:44you around it, it's ridiculous. It it's
58:47so too much too big. But what you don't
58:51want to lose is the house of Fraser.
58:53Sometimes if you can convert the top
58:55two, three, four floors and everybody
58:57works together and the council are like,
58:59"Okay, as long as you keep this much
59:01retail," and we mean retail. No
59:04cheating. Yeah. No cheating. Okay, fair
59:07enough. You get I'm telling you councils
59:10are good. I I've got to say one because
59:12I can't help myself. The guys in Bath I
59:15for some reason I ended up going to see
59:16Bath. That's what happens when I go and
59:18see somebody I shouldn't. They had done
59:20exactly that and they worked with the
59:21previous um uh House of Fraser
59:24management and they they actually put
59:26the upper parts of the building to
59:28residential which made it made the
59:30retail was viable underneath. I went to
59:32meet them. They were absolutely Mike,
59:35I'm telling you, we can't give you any
59:38kind of subsidy that we can't
59:40realistically see getting it back
59:42because that's a pound we haven't got.
59:44And I ended up sitting with them going
59:47through their numbers and I could see
59:49their problem and plus minus somehow
59:52we're going to come to some sort of deal
59:53that hopefully House of Fraser can
59:56survive and the council can carry on
59:59collecting a fair amount of rent and
1:00:02business rates. So councils, I know I
1:00:05shouldn't be sitting here. I'm not the
1:00:06people that I people would think I'd sit
1:00:08and argue for councils, but I think they
1:00:10could be empowered and my dealings with
1:00:12them so far, they've been pretty
1:00:15amazing.
1:00:16Got to say,
1:00:17so it's huge obviously hugely important.
1:00:19It's [clears throat] not just financial
1:00:20then it's the way that you you're able
1:00:22to work with councils. What other things
1:00:24would they do that that you would want
1:00:25to be involved with that would be
1:00:26helpful? public realm or you've
1:00:29mentioned planning you being able to be
1:00:31I'd love to see more park and ride.
1:00:33Yeah, I'd love to see more free car
1:00:35parks. I I personally would do the
1:00:37system that and I know the council have
1:00:40to buy in some private car parks and
1:00:42they don't have the money, but let's
1:00:44let's imagine this 20% off the web that
1:00:46would give them some firepower. Yeah.
1:00:48Say, well, with that 20% off the web,
1:00:50why don't you go and buy all those town
1:00:52center car parks? And by the way, if you
1:00:54go in a store and you spend over £10,
1:00:57say, you get a free 2hour stamp. You're
1:01:00allowed a maximum of three, you can have
1:01:02free parking for 6 hours. The council
1:01:05own the car park because they've got it
1:01:06from the uh web money. They can then
1:01:09subsidize the car park because it is for
1:01:11the high streets, not for people to come
1:01:12and go to work on a train and all that
1:01:14fiddling and messing about and all that
1:01:16nonsense. Yeah. And and anybody who does
1:01:18get fiddle, I just make the the
1:01:20penalties
1:01:2210 times because that seems stops me
1:01:23fiddling anything. That's all I can say.
1:01:26So if you make the penalties big, you
1:01:27tend to behave better. And you could
1:01:29then so re-energize the high streets
1:01:31from that. Better park and ride, free
1:01:34parking, but only if you got the stamps
1:01:36from the stores. Simple, simple little
1:01:39stuff. I am no different to anybody
1:01:42else. When there's free glasses at the
1:01:45petrol station, I want them. I want them
1:01:49because they're free. I can't help it. I
1:01:52want them. And and and and I definitely
1:01:55don't need free petrol station glasses,
1:01:58but I do still want them. I don't care.
1:02:00Yeah.
1:02:00Human nature is what it is. But you
1:02:02you've obviously you you've come forward
1:02:04with with a lot of different ideas today
1:02:06and and been engaging in terms of um how
1:02:08you would like to interact with with
1:02:10councils. just how supportive would you
1:02:12be of business improvement districts or
1:02:15or any any sort of business um uh
1:02:18congratation that that got put forward
1:02:19in order to to improve the the local
1:02:22area and to get people onto H streets.
1:02:24I'm I'm not s I'm not such a fan of that
1:02:27because I think it's too little and it
1:02:29gets very diluted. I want I literally
1:02:32think you guys have got to grab the ball
1:02:34by the horns. You've got to literally
1:02:38How can I say it? is what what what's
1:02:40the thing in really in some sort of
1:02:42cataclysmic event you really because
1:02:44you're so far behind if you just imagine
1:02:47five years ago a retailer was down 1%
1:02:50like for life the web started to get
1:02:52hold four years ago and don't forget
1:02:55it's compounding he was 2% down or she
1:02:59three years ago 3% last year 4% this
1:03:04year 5% I'll give you a clue what do you
1:03:06think is going to happen next year and
1:03:08plus minus. That's exactly what's
1:03:10happening. It is it's not it's not I'm
1:03:13I'm not I'm not crying for retailers
1:03:16that are my size and to make the money I
1:03:18make because nobody in their right mind
1:03:20would. But what you're trying to do is
1:03:23making sure that these, if you like,
1:03:26currently more successful retailers
1:03:29don't up stumps and leave the high
1:03:30streets. I understand what you're trying
1:03:33to do. I've just got what I think is a
1:03:35practical way of doing it.
1:03:38help me or make me. Very simple, right?
1:03:42Maybe a combination of both.
1:03:44Just finally, sorry. Earlier on, you
1:03:46said the high street was dead.
1:03:48Yes.
1:03:48It sounds like you've got a lot of faith
1:03:49in it revival.
1:03:50Yeah, but I I by definition I've got no
1:03:53education. I can't do anything other
1:03:54than retail. But I can see in our
1:03:56business we have to do we would, as I
1:03:59say, have to be made to do something or
1:04:01the high street will die. I can't do
1:04:03anything else. I am wed to retail. I
1:04:06can't suddenly become an investment
1:04:07banker. I haven't got any
1:04:08qualifications. I is retailing is in my
1:04:12blood. So to me, I can always see that
1:04:15there could be some light at the end of
1:04:17the tunnel. And remember, the biggest
1:04:19thing that's killed the high streets is
1:04:20not the high streets themselves. It's
1:04:23the web. Be absolutely crystal clear.
1:04:26The web has killed the high street, not
1:04:28the local councils, not this, not that.
1:04:31Maybe everybody's acted far too slowly.
1:04:34Maybe five years ago I should have been
1:04:36sat here because I'd have told you
1:04:38exactly what was going to happen because
1:04:40it there's not there is no alternative
1:04:43unless you do something some huge
1:04:45cataclysmic change that is what's going
1:04:47to happen. It is just going to die and
1:04:49you're going to be left with Oxford
1:04:50Street and Bomb Street and by the way
1:04:52outside of London it's going to be like
1:04:54a ghost town.
1:04:56Okay.
1:04:56Sorry that's what it's going to be. Ju
1:04:58just very very briefly just to give some
1:05:01scale of the issue uh in terms of rents
1:05:03which clearly are a major issue that
1:05:05you're trying to grapple with. Could you
1:05:06just give us some idea what sort of rent
1:05:08reduction you expect to see over the
1:05:10stores that stay open? What sort of
1:05:12percentage drop would you expect?
1:05:13House of Fraser.
1:05:14Yeah.
1:05:16[sighs]
1:05:16In in the base rents it's probably going
1:05:19to be around 50% in the base rents.
1:05:22Yeah. But you're talking now on average.
1:05:24So some landlords are going to get
1:05:26nothing. Other landlords are still going
1:05:28to keep.
1:05:29So you're best to keep the business open
1:05:30as long as you just pay the business
1:05:31rates and they get nothing. That's
1:05:32Yeah. Yeah. But that but but you you've
1:05:34got the scale. You've got some people
1:05:36are going to get nothing
1:05:37not and other people are actually going
1:05:39to be able to put their rent up.
1:05:40The scales about 50%
1:05:41because I'm I'm I'm not being funny. If
1:05:43you've got a house of Fraser, let's talk
1:05:46about it in a in a Oh, I must name the
1:05:50place. I get told off. But how's a
1:05:52phrase? Let's talk Let's talk about uh
1:05:54if if I had one in Bond Street because
1:05:56I'll talk about hypothetical. What do I
1:05:58get told off?
1:05:59Rents in Bond Street are still going up.
1:06:01Right.
1:06:02So, so you've got to be very careful
1:06:04where you target this money. If you sat
1:06:07here and and said to me, "Oh, that's
1:06:10very good. Nightsbridge Nightsbridge
1:06:12needs to give people free money for shop
1:06:15fits. I'll take you outside and think
1:06:17think you're a lunatic." It's got to be
1:06:20where the high street is failing. Okay.
1:06:22It's got to be where the high street
1:06:24needs
1:06:24will be variable according to the
1:06:26correct. It's totally variable. But our
1:06:28our rent's going to half a house of
1:06:29Fraser and the only reason they are is
1:06:31who else is going to take the stores?
1:06:33Yeah.
1:06:33Okay. Just just briefly what you've got
1:06:36uh you know you obviously got big
1:06:37interest in Debons as well.
1:06:38Yeah.
1:06:39Is there any indication that Debon and
1:06:41House of Fraser might come to some
1:06:42arrangements in the future?
1:06:43What in in what? Well, in terms of
1:06:46stores, joint user stores.
1:06:48Well, working together, you mean? Yeah.
1:06:50Yeah. But they should have done years
1:06:51ago. I told them to work together.
1:06:55They should work together. You know why?
1:06:57Because they got separate managements
1:06:59and separate egos and they it's not
1:07:02their equity.
1:07:04So in actual fact, they will wander off
1:07:05and get another job somewhere else. Why
1:07:08on earth house and Fraser and Deboms
1:07:10don't do more together? Now say it was
1:07:12buying together. Very simple. save on
1:07:14logistics instead of having
1:07:16would save on the number of stores that
1:07:17you've got Deon and House and Fraser
1:07:19next to each other. You might end up
1:07:20with one store,
1:07:20but you will end up with one anyway if
1:07:22the market isn't right. If you got to
1:07:24you got to think about it,
1:07:26the one of the reasons that I think
1:07:28House of Fraser failed is it didn't
1:07:30elevate itself. It didn't change its
1:07:32proposition. Consumers today are more
1:07:35into luxury brands. I'm telling you,
1:07:38Harrods and Selfridges will have a good
1:07:40year.
1:07:41I'm telling you, luxury brands are on
1:07:44the up. Teenagers, people today wear
1:07:48their wealth. We have a chain, it's
1:07:50called flannels. It's It's not down.
1:07:53Why? Because it happens to be in the
1:07:56right place at the right time because
1:07:59luxury is coming in. I openly tell
1:08:01people, I am not crying. Don't feel
1:08:04sorry for me. But what you're not,
1:08:07you're not here to feel sorry for me.
1:08:08you're here to make me make a difference
1:08:10or help me make a difference. That's the
1:08:12answer in my opinion.
1:08:14Thank you very much. You say I say to my
1:08:16colleagues when you were talking about
1:08:17free glasses, I said, "Well, I won't
1:08:19mention free transfers. I won't go into
1:08:21into that territory today. I think we've
1:08:23avoided that one." Uh anyway, Ashley,
1:08:26you told us that you're you're not a
1:08:28pantoman villain. You're not Father
1:08:29Christmas. I think you've still left us
1:08:31to decide whether you're the wicked
1:08:32uncle or the fairy godmother. and uh
1:08:35time will no doubt tell but thank you
1:08:37very much indeed for coming to answer
1:08:39our questions today and going through
1:08:40quite a lot of issues about how you see
1:08:42the house treat developing hopefully
1:08:44being successful in the future. Thank
1:08:45you very much indeed.
1:08:46Thank you very much. Thank you. Thank
1:08:48you.

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