Mike Ashley thinks luxury flannel clothing stores are ‘crazy’

It’s never easy to take over a business, especially when your predecessor is as successful and expressive as Mike Ashley.

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

It is targeting “new luxury, aspirational customers,” especially in its 60 Flannels stores, which sell designer clothing.

However, he admits that his father-in-law thinks the stores are “crazy.”

Frasers Group’s best-known brand remains Sports Direct, which Ashley founded in 1982 and turned into a publicly traded company.

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

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

Ashley, 58, remains the majority shareholder in Frasers Group and Murray says his father-in-law is heavily involved in the business.

“Mike is a skilled trader,” he says. “We call him ‘The Mechanic’: he’s looking after the warehouse, the supply chain, he’s optimizing that engine.

“He’s making sure the back-end system and logistics keep up with the front-end. That’s what he spends his day and night thinking about.”

On family occasions like Christmas, “business is all we talk about, there is nothing else, it is our common interest.”

“It’s hard,” Murray says with a smile. “We’re both obsessed, we live it and we 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 showcases his vision of ‘aspirational shopping’.

If you take a look at the Flannels store on Oxford Street in London, you’ll see sports tops for £600, trainers for £400 and hoodies for £300. Certainly no 2-for-1 sock deals, which you’ll still see at the Sports Direct store looking at you from across the road.

In the basement of the London Flannels store there is even an immersive digital art installation.

So what does Mr. Ashley do with Flannels?

“He thinks it’s crazy,” says Murray. “He can’t understand why people spend so much on luxury clothes. But he understands that he doesn’t understand, 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 done.”

In its latest set of results, Frasers Group’s “premium lifestyle” brands had revenue of just over £530m in the six months to the end of October last year, almost 25% more than the previous year, with Flannels the biggest driver of that growth. .

The sports retail side of the business, including Sports Direct, still brings in about three times more revenue than the premium lifestyle arm, though it’s not growing as quickly.

Flannels has “ridden the wave of aspirational new purchases,” says Murray, despite the cost-of-living crisis.

His target market is 18- to 30-year-olds, who have been taught by social media to aspire to expensive products, he says.

Many still live in their homes, so they have been shielded from rising interest rates, rents, or high energy bills. They like to spend their disposable income on health, fitness and clothing, says Murray.

While Flannels may be his pride and joy, Murray admits that it’s not as scalable as Sports Direct, which is expanding internationally, including in Asia.

After a year of work, he says that he would like his legacy to be “the transformation [of the business] from a discount sports retailer to the largest and most aspirational retailer in Europe.