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Stock Watch: Sports Direct’s last ever set of results

Emma-Lou Montgomery

Emma-Lou Montgomery - Fidelity Personal Investing

In the run-up to Christmas, company results have become noticeably thin on the ground, but Mike Ashley’s Sports Direct International (SPD) can usually be relied on to pull something out of the bag.

When Sports Direct posts its half-year results on Monday it will be its last set - ever. That same day the group is holding an annual meeting to approve a change of name to the company.  For that to happen it needs 75% approval, but Mr Ashley owns about 62% of the shares, so it is unlikely to fail.

What will then happen is that Sports Direct - the parent company - will become Frasers Group. The Sports Direct name isn’t about to bite the dust though. The 450 Sports Direct stores in the UK and the 253 European stores will retain the original name and distinctive red and blue branding. 

Mr Ashley has already laid out his ambitions to re-launch House of Fraser, which he picked up for £90 million after the once high-end department store went into administration in August 2018. Frasers is the name he has chosen for these outlets and he is spending about the same amount again to acquire the freehold to the original Frasers store in Glasgow, which he plans to retain as the flagship store.

In a notice convening the annual meeting, the company said the change of name was “reflective of the business strategy of the company to elevate its retail proposition across all channels” and will demonstrate its transformation “into the holder of a diversified portfolio of sports, fitness, fashion and lifestyle fascias”. 

The billionaire businessman started Sports Direct back in 1982 and from there went on a sports brand buying spree - initially snapping up the Donnay, Lonsdale, Dunlop and Slazenger brands as well as the Lillywhites chain, before adding LA Gear, No Fear and Kangol plus a host of others into the mix.

While international expansion happened alongside that, it was the 2014 stakes in Debenhams and House of Fraser that proved to be the turning point for Mike Ashley; broadening his retail reach and taking him and the Sports Direct group of companies down a new path.  

Mr Ashley is clearly keen to lose his own cheap and cheerful/tracksuit and trainers image and prove that the assortment of struggling retailers he’s acquired of late aren’t ultimately all destined for the bargain bin.

They certainly aren’t brands anyone would associate with the bargain bin. His purchases include high-end lingerie retailer Agent Provocateur and fashion chain Jack Wills, Game Digital, Sofa.com and Evans Cycles. Just like House of Fraser, all had been in administration - or were on the brink of it - when Mr Ashley and co pounced.

Little surprise then that he’s circling department store chain Debenhams, in which he already has a near 30-percent stake and which is looking increasingly weaker, as it closes stores up and down the country and recently posted its worst set of results in its 240 year history.

But Sports Direct’s acquisition spree hasn’t come without cost. Even if he did manage to snap up Sofa.com for a pound. Over the summer, Mr Ashley suggested the acquisition of House of Fraser had been a mistake and revealed the chain had lost £54 million between August last year up to the end of the group’s financial year in March.

Last month, around the time baby goods group Mothercare admitted it was struggling, Sports Direct categorically stated that it had no intention - at the present time - of acquiring any more distressed UK retailers, including Mothercare.

On Monday, shareholders will no doubt want to hear more about the newly-named group’s plans, especially what the future of the House of Fraser store chain looks like. Sports Direct has insisted that it doesn’t plan to close a large number of House of Fraser stores in the new year and has been 'working rapidly' on an investment plan for the business.

But analysts say the crucial Christmas trading period is more likely to seal the fate of any under-performing stores. 

More on Sports Direct

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