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Frasers Group

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Sports Direct International plc
Company typePublic (LSE: SPD)
IndustryRetailer
Founded1982
HeadquartersShirebrook, England
Key people
Mike Ashley (Founder and Deputy Executive Chairman)
Dave Forsey (CEO)
Simon Bentley (Chairman of the board)
ProductsSporting goods
Revenue£1.347 billion (year to April 07)[1]
Number of employees
30,000 (year to April 07)[1]
SubsidiariesSports World
Websitewww.sports-direct-international.com

Sports Direct International plc is a British retailing group. Founded in the late 1970's by former county squash coach Mike Ashley, they are now the UK's largest sporting retailer[2] through a number of retail subsidiaries and sports equipment brands.

History

After leaving school at 16, Ashley began trading on the high street, opening Sport and Ski shops in and around London in the 1980's - by 1990, there were three registered and recorded outlets. The chain expanded quickly funded by private money and profit from the stores, and by the late 1990s Ashley had rebranded the chain Sports Soccer and opened over 100 stores across the United Kingdom. However, as a sole trader and not having to file accounts at Companies House, little was known about him even by rival retailers. Although sole-trader status preserved his privacy, Ashley was missing out on the limited-liability advantage offered by company status, and in 1999 incorporated the business[3].

Today

The group has over 400 UK stores including the chains Sports World, Lillywhites (acquired in 2002), gilesports and the Original Shoe Company. The group employs around 12,000 people in the UK and at stores in Ireland, Holland, Belgium, South Africa and Slovenia. In 2006 it overtook JJB Sports as the UK's largest sports wear retailer[4]. In mid-2006 it was also revealed that Ashley had held talks with John Hargreaves, founder of Matalan on both taking a 25% stake in the trouble retail business and installing mezzanine floors in larger Matalan stores, on which Sports World outlets could be operated.[5].

Brands

In February 2003 the company bought the Dunlop Slazenger brand for £40M, closely followed by the acquisitions of outdoor gear manufacturer Karrimor in March 2003,[6] Kangol for £10M[7], boxing brand Lonsdale and tennis brand Donnay. Most of these brands were bought from distressed sellers. After looking at a takeover,[8] Sports Direct took a £9 million stake and signed a lucrative long-term deal in August 2005 with troubled brand Umbro,[9] which has since agreed to be acquired by Nike.

The brands themselves are an increasingly important part of the business, and Ashley made £10m from selling the intellectual-property rights to the Slazenger Golf brand to arch-rival JJB in 2005.

Other holdings

Sports World has built a 29.4% stake in Black Leisure, the owner of Millets and Mambo,[10] and is thought to hold stakes in JJB Sports and 19% of JD Sports. Original Shoe Company, the Ayrshire-based chain of 50 shoe stores, has been acquired by Sports World for undisclosed terms. [11] "He [Ashley] likes to park his tanks on peoples' lawns," said a banker. [12]

IPO sale

In late November 2006, a number of business newspapers reported that Ashley was looking at an IPO of Sports World International. He has hired Merrill Lynch[13], who have initially valued the group at up to £2.5bn ahead of a possible flotation on the London Stock Exchange[12]. The group debuted on the LSE on 27 February 2007.[14]

Marketing tactics

Often derided as a Tesco like "pile it high, sell it cheap" merchant after his transformation of the croquet-set loving Lillywhites, Ashley's chain has a more sophisticated approach. The chain will often use a "closing down sale" tactic on its multiple brand outlets, and re-open in another location soon afterwards. Customers are also drawn into the store by almost margin-less promotions on perceived high-value brands like Nike trainers and Adidas tops, making money for Sports World when they also buy an own brand item marked up at a substantial margin[6]. The company also operates a "no refunds" return policy, offering customers an exchange or credit note, which allows it to retain a substantial profit.

Ashley also likes to keep costs on his employees down. In March 2007 he closed his Dunstable warehouse and moved everything north to Shirebrook where employees are paid less.[citation needed] Sports World is also selective in what it pays to its staff for example, staff who are over eighteen earn £4.60 an hour whereas other staff who are the same age can earn up to £5.75 an hour.[citation needed]. Furthermore the vast majority of store employees work at least an extra half hour at the end of their shift in order to tidy up the shop without pay, which inevitably reduces staff overheads significantly. Not only that full time employees work 50 hours a week, minimum.

Staffs purchases and discount are restricted by availability only Thursday.

Brands

Retail

  • Lillywhites
  • Original Shoe Company
  • SportsDirect.com - internet retail
  • Sports Soccer - former brand, some times used on older stores/closing down tactics
  • Sports World
  • Giles Sports
  • Bike Clearance - Concept store idea specialising in Bikes
  • Goldigga - Acquired by Sports Direct in 2008

Clothing & Equipment

References

  1. ^ a b "Annual Report 2007" (PDF). Sports Direct International. Retrieved 2007-11-07.
  2. ^ Finch, Julia (28 February 2007). "Flotation makes Sports Direct founder a billionaire". The Guardian. Retrieved 2007-11-07. {{cite news}}: Check date values in: |date= (help)
  3. ^ Revealed: UK’s first sports kit billionaire - Times Online
  4. ^ http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/04/06/cnswi06.xml
  5. ^ Billionaire sports tycoon plots move into Matalan - Times Online
  6. ^ a b Sunday Times - Rich List
  7. ^ MPDClick :: Kangol sold to sports empire (UK)
  8. ^ Sports World tycoon mulls bid for Umbro - Business News, Business - Independent.co.uk
  9. ^ "Sports World tycoon mulls bid for Umbro". The Independent. Retrieved 2007-11-07.
  10. ^ Ashley empire may be worth £2.5bn - Times Online
  11. ^ Market Report: Sports World owner grabs stake in John David - Business Analysis & Features, Business - Independent.co.uk
  12. ^ a b http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/12/10/cnsports10.xml
  13. ^ UK Retail News
  14. ^ "Sports Direct: timeline". Guardian Unlimited. 24 July 2007. Retrieved 2007-11-07. {{cite news}}: Check date values in: |date= (help)
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