Sports Direct has taken an indirect economic interest of 9% or 4.3 million shares in US brand management company Iconix Brand Group, which owns and markets brands including Umbro, Lee Cooper, Badgely Mischka and Ed Hardy.
The UK retailer built up the shares over a seven-week period between November 13 and December 30 but does not have the power to vote or direct the vote, or the power to dispose or direct the disposition of any of the shares, according to a document filed with the US Securities and Exchange Commission.
Sports Direct previously held a 30% stake in football kit maker Umbro before its previous owner Nike took it private in a £285m takeover in 2007. Iconix bought Umbro for $220m (£137m) in 2012.
Shares at Iconix plunged by approximately 25% after it received a formal order of investigation from the commission relating to the “counting treatment for the formation of certain joint ventures” on December 28.
The issue relates to Iconix’s annual report for the year ended December 2014 and whether some joint ventures should have been consolidated in its historical results. The company has since restated its historical financial statements for the fourth quarter of 2013 and the fiscal year, each quarter and the fiscal year of 2014, and the first and second quarters of 2015.
For the nine months ended September 30, licensing revenue fell 7% to $279m (£190.1m) and adjusted EBITDA fell 34% to $135.7m (£92.6m). Net income was down 50% to $54.5m (£37.2m) for the period.
Chief executive, chairman and president Neil Cole stepped down from his roles on September 30 and was replaced by board member Peter Cuneo as chairman and interim chief executive.
Sports Direct and Iconix have not yet responded to Drapers’ request for comment.