FRESH doubts have been raised about the future of House of Fraser after the boss of its owner Sports Direct said its problems were “terminal in nature”.

The department store chain has a large branch in Bournemouth’s Old Christchurch Road, which was saved from imminent closure when Mike Ashley’s group bought the company out of administration last year.

But in Sports Direct’s annual results, chief executive Mr Ashley said that in retrospect, the company might not have made the right decision.

Mr Ashley said the company spent £90million buying the assets of House of Fraser from administration and had then “invested close to that to kickstart the supply chain” as well as signing up to buy the Glasgow Frasers store for £95m.

“However, as we have continued to look under the bonnet as we integrate the business, we have found that the problems are nothing short of terminal in nature,” he said.

He said previous owners had under-invested in stores and support services, while the website and warehouse shut soon after the buyout.

“We have done as much as we could realistically do to save as many jobs and stores as possible, and indeed we appreciate many landlords and local authorities have worked hand in hand with us as we tried to do this,” he said.

“However, there are still a number of stores which are currently paying zero rent and that are still unprofitable and unfortunately this is not sustainable. We are continuing to review the longer-term portfolio and would expect the number of retained stores to reduce in the next 12 months.”

On a scale of one to five, the financial health of House of Fraser stood at one, he said.

He said “there could be a bright future for House of Fraser”, but in retrospect he might have made a different decision.

Bournemouth’s House of Fraser, which can trace its history to 1871, was due to close this year under a rescue plan by a previous investor.

Earlier this year, the Bournemouth site’s landlord, M&G Real Estate, said it was working with Sports Direct “to keep the store open whilst the new owners determine their longer-term strategy for this particular store”.

Shares in Sports Direct plunged to an eight-year low yesterday after the company delayed its results until nearly an hour after the stock market closed last Friday.

Investors appeared particularly concerned with the revelation that Belgian authorities are chasing Sports Direct for a 674million euro (£605m) tax bill following a recent audit.

The company said it would challenge the demand, adding it was “less than probable that material VAT and penalties will be due in Belgium as result of the tax audit”.

The company said sales across the business grew 10.2 per cent to £3.7billion, but excluding acquisitions, this was down 1.9 per cent on a “currency neutral” basis.