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Sports Direct counts cost of House of Fraser rescue

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Sports Direct has reported a 27% fall in half-year profits as it counted the cost of swallowing up failed department store chain House of Fraser.

The retailer, controlled by tycoon Mike Ashley, said House of Fraser had notched up a loss of £31.5m since it was acquired in August for £90m.

The group also injected £70m into the department store’s supply chain and Mr Ashley admitted that he faced “significant challenges” turning around its fortunes.

Sports Direct reported underlying pre-tax profits of £64.4m for the six months to 28 October, down from £88m a year ago.

Mr Ashley said that, stripping out House of Fraser, the group was on course to grow full-year earnings in line with target but that including the department store chain it was set to be behind last year’s result.

The Sports Direct chief executive said: “I have made my views clear that I believe the previous House of Fraser senior management team traded the business whilst it was insolvent for a long time.

“This means we have significant challenges ahead in turning House of Fraser around.

“However, I genuinely believe we have acquired a fantastic opportunity and with the efforts of Sports Direct and House of Fraser teams, and the support of the brands, local councils and landlords, we can turn House of Fraser into the Harrods of the high street.”

Sports Direct bought 169-year-old House of Fraser out of administration in August and Mr Ashley said he aimed to keep open 80% of its 59 stores – though has since said that to do so would be a “godlike” feat.

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