High streets as we think about them are already dead, Sports Direct CEO tells MPs

Mike Ashley, the founder and chief executive of Sports Direct, has called for a tax on retailers that make more than a fifth of sales online as he said many high streets were “already dead” and more would be killed off without government intervention.

In a sometimes bad-tempered appearance before MPs who are investigating how to support the future of the high street, Ashley said the only way to keep physical stores trading was by helping – or forcing – retailers to do so.

“It is not my fault the high street is dying; it’s not House of Fraser, not Marks & Spencer or Debenhams’ fault. It is very simple why the high street is dying. It is the internet that is killing the high street,” he said.

Ashley suggested that retailers with more than 20% of sales online should pay a 20% tax on those sales and this would force existing retailers and pure players to invest in high streets. He confirmed that Sports Direct, which has £400m of online sales annually, would have to pay the tax.

He suggested the payments could be channelled to local authorities to help them fund business rate cuts in struggling areas that would be conditional on investment in refurbishment of local high-street stores.

“You have to grab the bull by the horns,” he told MPs. “You are in a cataclysmic event.”

“I want to make it crystal clear: the mainstream high streets as we think about [them] today, not Oxford Street or Westfield, are already dead. The patient has died,” Ashley said. He said mainstream retailers would only consider entering some high streets with significant financial incentives to do so.

He said that if he managed to save 80% of House of Fraser’s 59 stores from closure, as he has previously said he would try to do, it would be a “god-like performance”. Such an achievement would probably require agreeing an average 50% cut in rent across the group, with some stores paying nothing, he said.

Ashley, whose retail group this year snapped up the ailing House of Fraser and Evans Cycles chains, last month demanded a meeting with MPs in Westminster to tell them how to save the British high street.

Speaking after the meeting, Ashley said he still hoped to save about 80% of House of Fraser’s stores – all but 12 – but it was “getting tougher” to do so.

Since August, Sports Direct has agreed deals on at least 23 stores, including Kendals department store in Manchester, which was saved from closure late last week after intervention from the local council. Ashley has pledged to turn House of Fraser into the “Harrods of the high street” but a number of key suppliers have pulled out after disputes over terms.

About 12 stores are to close after Sports Direct failed to secure terms with landlords including Intu, the owners of shopping centres such as the Metrocentre in Gateshead and Lakeside in Essex.

Ashley said he was neither a “pantomime villain” nor “Santa Claus”, adding: “I’m not sitting in my office stroking a white cat … I find it very frustrating: what benefit have I got of closing stores?” But he said it was not possible to keep every store open.

He said many local councils were working hard to help him keep stores open by looking at ideas including converting upper floors to flats or other uses to help make sites more viable. He said councils had a key role to play in saving high streets alongside landlords and retail investors, all of which were likely to have to share some financial pain to fund investment, he added.

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Ashley has also said that half of Evans’ 62 stores could close, depending on discussions with landlords.

Giving evidence to the housing, communities and local government select committee, Ashley defended the use of zero-hours contracts at Sports Direct, saying that a staff survey had found that the vast majority of workers preferred to continue using them.

He said he could not promise not to change the terms and conditions of House of Fraser staff or potentially introduce zero-hours contracts as he said he did not want “to put concrete boots on prehistoric practices that are not relevant for today’s consumers”.