Sports Direct has acquired 56.8m shares or a 4.63% stake in Debenhams, saying that it wants to work “at an operational level” with the struggling department store.
The sportwear giant said the purchase took place without the prior knowledge of the Debenhams board of directors.
Debenhams said it was “open minded” about working with the UK’s biggest sportswear retailer in order to boost performance.
The department store noted that Sports Direct “intends to be a supportive shareholder”, adding it wants to work with Mike Ashley’s company to “improve its performance, alongside its own existing and planned initiatives, in order to create value for all Debenhams shareholders.”
Debenhams largest share holder is asset management company Schroders which has an 18% stake in the department store, followed by Milestone, the investment vehicle of Landmark Group, which has 7.5% and US quant fund LSV which owns 5% of the company.
The purchase follows a difficult Christmas trading period for the department store, which issued a profit warning last month as gross margins declined “due to product category mix and higher markdown”.
Profit before tax is expected to drop to £85m from £114.7m in 2013.
In December Sports Direct reported a 16.9% rise in underlying pre-tax profit to £146.2m for the six months to October 27, as the retailer said it performed ahead of management’s expectations despite a tough comparative period last year featuring the Olympics.