Sports Direct should give House of Fraser customers a hug even if it proves pricey

The company has no legal obligation to people with unfulfilled orders or gift cards with the department store chain it bought out of administration. But in taking a hard line it's missing a golden opportunity to polish its image

House of Fraser was bought out of administration by Sports Direct (Reuters)

House of Fraser presented Mike Ashley and Sports Direct with a potential gift.

The ‘Harrods of the High Street’, could have batted away much of the bad PR accumulated in recent months by giving the broken department store chain’s unhappy customers a hug after having bought it out of administration for £90m.

It is a hard fact of UK bankruptcy law that while the deal included the House of Fraser name, the stores and the stock, it did not include any liabilities to HoF customers.

Those who paid for their purchases by credit card may be able to claim some redress, but otherwise unfilled online orders and gift cards are all but worthless. Customers are in a long queue with trade and other unsecured creditors.

There are, however, things such as brand equity and good public relations. They don’t always come cheap, but the payoff is usually worth it.

Just imagine had Mr Ashely said something like this following the acquisition: “The law says we don’t have to fulfil online orders or honour gift cards made before we came in. But we at Sports Direct think that the law’s an ass.

“It might take us a bit of time, but bear with us. We’ll honour your orders, and your gift cards are good. That’s the Sports Direct way.

“If you have to wait too long, we’ll even give you a giant Sports Direct mug that you can fill with tea. Oh, by the way, after your goods have arrived, or you’ve cashed in your gift cards, feel free to flip off all those rotters in the media and the City who’ve been saying mean things about us.”

Maybe not the last bit. But, hey, Mr Ashley recently issued a statement to the stock exchange trashing his own shareholders. He accused them of having “stabbed Sports Direct and myself in the back” for making a fuss about corporate governance.

So why not?

Sadly, if the reports are to be believed, and there has been a notable lack of communication from the company, HoF's customers shouldn't get their hopes up.

Sports Direct is said to be taking a ‘hard line’ with online orders. Those with gift cards have said they were told to send them in with the promise that replacements would be forthcoming. It has been radio silence ever since.

You can’t very well complain about “disproportionate scrutiny and misrepresentation”, as Mr Ashley did in his recent statement, if you’re not prepared to even keep in touch with the customers of the retailer you’ve just bought.

I’ve written before that Mr Ashley is a superb retailer. The problems that Sports Direct has had in recent years are fixable, the bad narrative that has surrounded the company is changeable, the relationships that have been strained are repairable.

It doesn't even require a hug. A smile and a handshake would do the trick.

But such is Mr Ashley’s hubris that he seems incapable of doing either. Instead, every potential ally is spurned, and there are potentially thousands of them in the case of HoF's unhappy customers.

The Sports Direct founder is a man sitting in a gold plated bunker crying Trumpian tears about the bastards all being out to get him.