His Sports Direct firm yesterday said it would continue to operate the historic Buchanan Street outlet under the House of Fraser name, securing the future of around 800 staff under plans to transform the building into the “Harrods of the North”.
The retail chain said it would invest in the sprawling 350,000 sq ft city centre location to “further elevate and enhance” what is described as an “iconic department store”.
House of Fraser said the “Harrods of the North” vision would be realised with the site continuing to host luxury brand names including Hermes, Christian Louboutin, Prada and Gucci.
Paul Freathy, a professor in marketing and retail at the University of Stirling, said the deal made sense for Mr Ashley, but warned customers of the store should expect changes ahead.
He said: “It’s a high-profile site and very well known, and Ashley and his team will have done their homework to look at the long-term value of the property versus the rentals. It strikes me as an astute, sensible and logical business decision from his point of view.
“The high street sector has struggled in recent years as it has come under fire from online and supermarkets and making it work is a tough challenge.
“But Sports Direct has acquired a series of brands that are fairly well known. The big department stores, such as Buchanan Street, are an ideal opportunity to get them out on the shop floor and away from Sports Direct itself.”
Sports Direct will purchase the building from Glasgow City Council, which is the administering authority for its ultimate owner Strathclyde Pension Fund.
Prof Freathy said: “The store itself has to change, otherwise it and House Fraser are not going to survive.
“Ashley has middle market and upper market brands and he can determine which will be the best fit for the Glasgow store.” He added: “If Ashley’s done his homework about property values in Glasgow, it could well go up over the next 15 to 20 years. It could be an investment for the future.”
The terms of the deal means Mr Ashley would pay more for the freehold to the building than the £90m he paid for the entire House of Fraser chain when he moved to save it from administration in August, on top of an existing 11 per cent stake he owned. The Glasgow store deal is set to be completed in January 2020.
The Buchanan Street store first opened in 1849 under the name Arthur and Fraser.