Sports Direct boss calls for turnover-linked rent deals
Retail billionaire Mike Ashley, the founder of Sports Direct, has demanded new rent deals are tied to sales across his high street store empire that now includes House of Fraser and Jack Wills as well as Sports Direct itself and the Flannels chains.
Ashley has asked landlords to agree to ‘turnover rents', where up to 15% of the rent due is linked directly to physical store sales, the Sunday Times reported.
The scheme, which allows retailers to share their risk and reward with landlords, are common in the US and are said to be standard practice for international giants such as Zara owner Inditex and H&M.
Some parts of Ashley's retail portfolio have been struggling, with department store group House of Fraser having major problems. The company now operates around 700 UK retail sites.
The shift to online shopping and rising costs have prompted retailers such as Select, Mothercare, New Look, Debenhams and Sir Philip Green's Arcadia Group to use company voluntary arrangements (CVAs) to close stores and slash rents. This has angered many of the chains that aren’t at breaking point, which are now seeking better deals. Next is known to have asked for better rent deals.
In a deeply troubled UK retail market, hit by weak consumer sentiment and reduced footfall, turnover rents could help tenants by transferring some of the risk of future falls in sales to landlords, who have enjoyed the security of long-term leases with rents that could be revised only upwards.
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