Sports Direct may sell famous brands in bid to become more upmarket
Sports Direct is looking into selling several of its brands as part of its bid to become the “Selfridges of Sports”.
Founder Mike Ashley’s mission to turn the company’s standing around and to make Sports Direct more upmarket has reportedly progressed to ditching brands no longer deemed relevant to the UK market. According to sources, tennis brand Donnay and boxing brands Lonsdale and Everlast, which are currently owned by the firm, could be put up for sale this year.
The company’s senior staff are said to have been considering reducing the portfolio in order to focus on relationships with top-selling international brands such as Nike and Adidas.
The firm also plans to concentrate on its core UK business, stating in December that it “does not currently have the bandwidth to develop and manage international brands simultaneously”. The firm currently owns 17 sports brands and 11 fashion and lifestyle brands, including Slazenger, Karrimor, and the 92-year-old sports retailer Lillywhites.
Last year, Ashley announced the company’s intention to focus on premium products, and to become the “Selfridges” of sports in the next two to four years. Selling some of the company’s current portfolio could allow Sports Direct can compete with JD Sports, which generally sells products with a higher price point.
Last month Sports Direct successfully agreed a sale of Dunlop to Japanese buyers Sumitomo Rubber Industries for £122m, while maintaining a royalty-free licence to continue using the brand. This is said to be the first in a series of brands being offloaded to make way for the new upmarket direction.
In a statement released in December, Sports Direct said that the revenue gained from the sale of Dunlop would be put towards its “commitment to its third party brand relationships.”
It has been a tough year for Sports Direct. Following a scandal over working conditions, the company saw its pre-tax profits drop by 57 per cent in the first half of 2016.
The outlook for 2017 looks uncertain, with many investors still unhappy and the weakened currency continuing to hurt business.
However, Ashley has promised shareholders that a “360-degree review” will be led by law firm RPC this year, examining working practices, corporate governance, and communications.
Sports Direct has also commenced a share buyback programme in order to reduce the share capital of the Company.