Finance / Sports direct buys two us chains in £78m debt deal
Sports direct buys two us chains in £78m debt deal
21 April 2017
Mike Ashley's Sports Direct has seized control of US retailers Bob's Stores and Eastern Mountain Sports in a 101 million US dollars (£78 million) debt deal.
The billionaire tycoon has acquired the chains by buying up the debts of their parent firm Eastern Outfitters, which filed for Chapter 11 bankruptcy protection in February.
The deal will see Mr Ashley take charge of around 50 retail stores in the US under the Bob's Stores and Eastern Mountain Sports fascias, which sell clothing, sportswear and camping equipment.
Sports Direct said the acquisition will provide it with a "footprint in US bricks-and-mortar retail and a platform from which to grow US online sales".
Eastern Outfitters booked a pre-tax net operating loss of 26 million US dollars (£20 million) in the year to January 28, although the gross assets of the businesses being acquired stands at 126 million US dollars (£98 million).
Mr Ashley, who also owns Newcastle United FC, has courted controversy recently, coming under fire for presiding over ''Victorian'' working conditions at Sports Direct's warehouse in Shirebrook, Derbyshire.
The retailer has since moved to elect an employee to attend board meetings.
Analysts at Peel Hunt were less than impressed with the news that Sports Direct is going to the US, with Jonathan Pritchard dubbing the decision a “major distraction”.
He added: “We are rapidly losing patience with the company’s lack of ability to stick to a strategy, not to mention the complete investor relations vacuum.
“We find the timing extraordinary. We don’t really care if this proves to be an unmissable deal. The shares (and arguably the company at large) depend on the success of the UK transformation programme and it seems that this focus is not shared by the company.”
Shares in Sports Direct were trading 0.7% lower at 312.8p in morning trading.
Joe Giddens/PA Wire