• Video report by ITV News Consumer Editor Chris Choi

Mike Ashley's Sports Direct has struck a £90m deal to rescue parts of House of Fraser shortly after the department store fell into administration, raising hopes for the future of thousands of staff.

In a stock market announcement, Sports Direct said it has acquired all of the UK stores of House of Fraser, the brand and all of the stock in the business.

House of Fraser earlier announced it had fallen into administration, putting the entire workforce at risk, however it now appears at least some of the business will be saved.

Some 17,000 staff are now being informed that they will be transferred over from House of Fraser to Sports Direct.

House of Fraser is hopeful 'current negotiations will shortly be concluded'. Credit: PA

Sources said that Mr Ashley will now begin the process of turning some House of Fraser stores into Sports Direct outlets and rebrand others under the Flannels fascia.

Sports Direct will work with administrators EY through a pre-pack process, where the new buyer will cherry pick the best assets.

Prior to its collapse, Sports Direct owner Mike Ashley had held an 11% stake in the department store chain.

The tycoon beat off competition from retail rival Philip Day, the billionaire owner of Edinburgh Woollen Mill.

Philip Day, owner of The Edinburgh Woollen Mill, failed in his attempt to take over House of Fraser. Credit: PA

It is understood that Mr Day's proposal was in excess of £100 million, would have avoided an administration and included House of Fraser's pension scheme.

However, accountancy giant EY, which was overseeing the process, opted for Mr Ashley's offer.

House of Fraser assured that its offices and stores will continue trading as normal while they look to reach a deal.

“All stores will be open for business as usual today,” it said in an announcement to the Luxembourg Stock Exchange.

Philip Hammond said that high street stores needed to adapt.

Asked whether reducing business rates could help the ailing the high street, Chancellor Philip Hammond told ITV News the problem was "structural".

He said that high street shops had to adapt in the light that most shopping was now being done online, rather than in store.

"If we reduce business rates we've got to make up revenues somewhere else," he said.

"What we're looking at is how we can re-balance our tax system so it is fair to businesses both doing business on the high street and businesses doing business online."

Department store House of Fraser has been in discussions to secure its future. Credit: PA

House of Fraser chairman Frank Slevin said: "This has been an extraordinarily challenging six months in which the business has delivered so many critical elements of the turnaround plan.

"Despite the very recent termination of the transaction between Cenbest and C.Banner, I am confident House of Fraser is close to securing its future."

House of Fraser was plunged into fresh crisis after C.banner, the Chinese owner of Hamleys, pulled its investment into the troubled retail chain.

C.banner was planning to buy a 51% stake in House of Fraser and plough £70 million into the ailing retailer, but scrapped the move last week.

Mr Ashley's acquisition comes a day after the closure of the football transfer window, in which the Newcastle United owner was accused by fans of failing to invest sufficiently in players.

In response to the news of the buyout of House of Fraser, former Newcastle captain Alan Shearer - a vocal critic of Mr Ashley - joked on Twitter: "What position does he play?"