Mike Ashley vows to turn House of Fraser into 'Harrods of the high street'

Mike Ashley says Sports Direct will attempt to keep as many House of Fraser stores open as possible following a £90 million rescue of the ailing retailer.

The tracksuit tycoon struck a deal to buy the firm out of administration earlier on Friday, raising hopes for the future of thousands of staff.

In a stock market announcement, Sports Direct said it has acquired all 59 House of Fraser stores, the brand and all of the retailer's stock.

Some 17,000 staff have been informed that they will be transferred over from House of Fraser to Sports Direct.

However, doubt remains over the long-term future of jobs and whether Mr Ashley will shut underperforming stores as part of a restructuring programme.

The billionaire, who also owns Newcastle United, said that Sports Direct will "do our best to keep as many stores open as possible''.

In the same breath, he said: "My ambition is to transform House of Fraser into the Harrods of the high street.''

Mr Ashley's deal was struck through a pre-pack administration process, where a company is put into administration before a new buyer cherry-picks the best assets.

The tycoon beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.

It is understood that Mr Day's proposal was in excess of £100 million, would have avoided an administration and included House of Fraser's pension scheme.

However, accountancy giant EY, which was overseeing the process, opted for Mr Ashley's offer.

The Sports Direct chief added: "This is a massive step forward and further enhances our strategy of elevation across the group.

"This will benefit both House of Fraser and Flannels in the luxury sector.

"It is vital that we restore the right level of ongoing relationships with the luxury brands. Our deal was conservative, consistent and simple.''

Sources said that Mr Ashley will now begin the process of turning some House of Fraser stores into Sports Direct outlets and rebrand others under the Flannels fascia.

Prior to its collapse, Mr Ashley had held an 11% stake in the department store chain.

The deal will see the tycoon tighten his grip over the British high street, adding to his sports retailing and "premium fashion'' empire.

The billionaire has also built up stakes in rivals such as Debenhams, Goals Soccer Centres and French Connection.

House of Fraser was plunged into crisis last week after C.banner, the Chinese owner of Hamleys, pulled its investment in the troubled retail chain.

C.banner was planning to buy a 51% stake in House of Fraser and plough £70 million into the ailing retailer, but then scrapped the move.

Prior to the latest crisis, House of Fraser had recently agreed a so-called Company Voluntary Arrangement (CVA) with landlords to close half of stores, with 6,000 jobs in the firing line.

It is unclear what the status of the CVA is following the takeover.

Like other retailers, House of Fraser has been stung by soaring costs and falling consumer spending power.

The company saw its business rates bills rise £3.99 million to £30.24 million this year following a Government revaluation, according to research group Altus.

Richard Lim, of Retail Economics, said: "This is a hugely ambitious move for Sports Direct. The combination of both businesses will yield some vital cost-saving synergies while it's likely that some of the struggling House of Fraser sites will be rebranded to Sports Direct.

"Nevertheless, this is a part of the industry that is under a huge amount of pressure. Turning around the business will not come easy. The stores are failing to attract sustainable levels of footfall while battling against rising operating costs and shifts in shopper behaviour."