Mike Ashley thinks luxury Flannels shops ‘bonkers’

Taking over a business is never easy, especially when your predecessor is as successful and vocal as Mike Ashley.

But a year after taking over from his father-in-law as CEO of Frasers Group, Michael Murray told the BBC he was reinventing the company in his own way.

It targets “new, discerning luxury customers,” particularly at its 60 Flannels stores that sell designer clothes.

He admits his father-in-law thinks the deal is “crazy”.

The Frasers Group’s best known brand remains Sports Direct, which Mr. Ashley founded in 1982 and grew into a public company.

The Sports Direct empire was renamed Frasers in 2019 and now includes companies such as Jack Wills, Sofa.com, Evans Cycles and House of Fraser as well as Flannels.

Mr Murray, 33, is married to Mr Ashley’s eldest daughter, Anna. Before taking over as CEO last year, he was not an employee of Sports Direct, nor did he hold a seat on the board. He earned millions of pounds in consultancy fees in connection with a variety of property deals he completed for the group.

Sports Direct originally made a name for itself with great deals on sporting goods. Self-made billionaire Ashley made headlines with revelations about his binge drinking and 14-year tenure as owner of Newcastle United Football Club.

Mr Ashley, 58, is still the controlling shareholder of Frasers Group and Mr Murray says his father-in-law is heavily involved in the company.

“Mike is an experienced operator,” he says. “We call him ‘The Mechanic’ – he takes care of the warehouse, the supply chain, he optimizes this engine.”

“He ensures that the back-end system and logistics keep up with the front-end. He thinks about it day and night.”

On family occasions like Christmas, the following applies: “We only talk about business, we don’t talk about anything else, it’s in our common interest.”

“It’s difficult,” says Mr. Murray with a smile. “We’re both obsessed, we live and breathe it.”

But one area where Mr Ashley and his son-in-law don’t necessarily see eye to eye is Flannels, where Mr Murray presents his vision of ‘shopping with ambition’.

If you look around the Flannels store on London’s Oxford Street you’ll see sports tops for £600, trainers for £400 and hoodies for £300. There are certainly no 2-for-1 sock deals you’ll still spot at the Sports Direct store staring at it from across the street.

There’s even an immersive digital art installation in the basement of the London Flannels store.

So what does Mr. Ashley think of flannel shirts?

“He thinks it’s crazy,” says Mr. Murray. “He can’t understand why people spend so much on luxury clothing. But he understands that he doesn’t, and he understands that you have to be relevant to consumers.”

“He understands when he sees the results. It’s quite remarkable what we’ve accomplished.”

In the latest results, Frasers Group’s ‘premium lifestyle’ brands posted sales of just over £530m in the six months to the end of October last year, up almost 25% year-on-year, with Flannels the was the biggest growth driver.

Sports retail, including Sports Direct, still generates about three times the revenue of premium lifestyle, but it’s not growing as fast.

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Despite the cost of living crisis, Flannels has “riden the wave of new, sophisticated shopping opportunities,” says Mr. Murray.

His target audience is 18- to 30-year-olds who have been taught through social media to strive for expensive products, he says.

Many still live at home and are thus protected from rising interest rates, rents or high energy bills. They are happy to spend their disposable income on health, fitness and clothing, says Mr. Murray.

While Flannels is his pride, Mr. Murray admits it’s not as scalable as Sports Direct, which is expanding internationally, including into Asia.

After a year in office, he says his legacy should be “the transformation.” [of the business] from discount sports retailer to Europe’s largest and most up-and-coming retailer.”