Mike Ashley thinks luxury Flannels shops 'bonkers'

It's never easy taking over a business, especially when your predecessor is as successful, and vocal, as Mike Ashley.

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

He is targeting "new luxury, aspirational" customers, especially in his 60 Flannels shops, which sell designer clothes.

He admits his father-in-law, however, thinks the shops are "bonkers".

Frasers Group's best-known brand remains Sports Direct, which Mr Ashley founded in 1982 and built into a publicly-listed company.

The Sports Direct empire was rebranded as Frasers in 2019 and now includes the likes of 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 he took over as CEO last year, he wasn't 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 host of property deals he made for the group.

Sports Direct originally made its name with cut-price deals on sports goods. Self-made billionaire Mr Ashley made headlines with revelations about his drinking exploits and his 14-year tenure as owner of Newcastle United Football Club.

Mr Ashley, 58, is still the majority shareholder in Frasers Group and Mr Murray says his father-in-law is very much involved in the business.

"Mike's an expert operator," he says. "We call him 'The Mechanic' - he looks after the warehouse, the supply chain, he's optimising that engine.

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

At family occasions like Christmas, "business is all we talk about, there's nothing else, it's our common interest."

"It's difficult," Mr Murray says 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 is showcasing his vision for "aspirational shopping".

If you look around the Flannels store on London's Oxford Street, you will see on display sports tops for £600, trainers for £400 and hoodies for £300. There are certainly no 2-for-1 sock deals, which you will still spot in the Sports Direct store that stares at it from over the road.

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

So what does Mr Ashley make of Flannels?

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

"He understands when he sees the results. It's quite remarkable what we've done."

In its last set of results, Frasers Group's "premium lifestyle" brands saw revenues of just over £530m in the six months to the end of October last year, up nearly 25% on the previous year, with Flannels the biggest driver of that growth.

The sports retail side of the business, including Sports Direct, still turns over around three times as much revenue as the premium lifestyle arm, though it is not growing as rapidly.

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Flannels has "ridden the wave of new aspirational shopping", says Mr Murray, despite the cost of living crisis.

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

Many are still living at home, so have been sheltered from rising interest rates, rents or high energy bills. They like to spend their disposable income on health, fitness and clothing, says Mr Murray.

While Flannels may be his pride and joy, Mr Murray admits it is not as scaleable as Sports Direct, which is expanding internationally, including into Asia.

One year into the job, he says he would like his legacy to be "the transformation [of the business] from a discount sports retailer to Europe's biggest, most aspirational retailer".