Sports Direct buys stake in US gun seller Dick’s Sporting Goods
Mike Ashley’s Sports Direct has bought a stake in one of the biggest sellers of guns in the US, with the aim of working closely with the company.
Sports Direct said it had bought a 2.3% stake in Pittsburgh-based Dick’s Sporting Goods, which has more than 600 stores, mainly in the eastern US states. The business has a stock market value of about $4bn (£2.8bn) and Sports Direct has bought the holding indirectly through a derivatives contract.
Dick’s stocks sports goods ranging from yoga mats to handguns, rifles, shotguns and ammunition, claiming it is “your firearms destination.”
The biggest gun retailer in the US is Walmart.
Ashley already does business with Dick’s, which has the exclusive US licence to sell Sports Direct’s Slazenger-branded golf equipment. As well as its Dick’s chain, the US company owns specialist golf, running, outdoor and fashion chains.
Sports Direct also increased its stake in Iconix Brand Group, whose clothing lines include Umbro, Pony and Lee Cooper. The stake, also held indirectly through a derivative contract, had increased to 11.5% from 9.5% when it was revealed a week ago.
Sports Direct said: “The main rationale for these stakes is to allow Sports Direct to hopefully build a relationship and develop commercial partnerships with the relevant parties. They also help the company to build relationships with key suppliers and brands.”
A spokesman for Sports Direct declined to comment on Dick’s position as a seller of guns.
Founded in 1948 and run by Ed Stack, the son of its eponymous founder, Dick’sstopped selling certain semi-automatic guns at its stores in December 2012 after 20 schoolchildren were shot dead in Sandy Hook, Connecticut. It was reported in 2013 to have sold such weapons at its Field and Stream offshoot.
Ashley, Sports Direct’s founder and majority owner, has regularly bought stakes in companies to influence them. His company bought an interest in Debenhams two years ago and now has concessions in eight of the department store group’s shops.
The company’s practices were recently called into question by a Guardian investigation into working conditions and governance at the group.
Shareholders may also question why Ashley is building stakes in US companies when Sports Direct’s core UK business is missing profit targets and some of his forays into foreign markets are struggling.
Other recent examples of Ashley’s operating style includeinstalling his daughter’s boyfriend as head of property, with the potential to earn millions of pounds, and allegedlyoffering an investment banker £15m to double Sports Direct’s share price during a conversation in a pub.
Sports Direct’s house broker, Haitong Securities, almost halved its estimate for the company’s long-term fair value on Tuesday and predicted further volatility ahead. Sports Direct’s shares have fallen by more than 40% since early December, threatening the company with ejection from the FTSE 100 indexes.
Debenhams has a venerable heritage but its critics point to tired-looking stores and outdated clothing ranges adding to the vicious circle of seemingly endless promotions. Sports Direct declined to say how it thought the companies could work together, leaving industry analysts to speculate about its plans.
Ashley has form when it comes to buying stakes in other retailers to put pressure on the management, including his former rival JJB Sports and Blacks Leisure. Blacks and JJB both went bust but Ashley remains willing to use his financial clout to get results. Late last year he threatened to buy 5% of Adidas after it refused to let Sports Direct stock Chelsea FC kits.