Sports Direct’s latest acquisition of Republic swells Mike Ashley’s store portfolio by more than 110 branches.
Mike Ashley’s sportswear business has been on the buying trail for the last few years, but this latest purchase has seen Sports Direct snap up a whopping 116 stores to add to its already 400-strong store portfolio.
At a time when closures and administrations are commonplace it is certainly an interesting move to see Sports Direct save all but five of Republic’s 121 stores.
The news emerged on the same day figures revealed town centres saw a 2.7% decline in the number of multiple retailers in 2012, equivalent to a net reduction of 1,779 stores.
It is not yet clear whether the stores will be converted to the Sports Direct fascia or whether they will remain as Republic, but either way it will see the sportswear giant own even more of the high street, building its already strong presence into somewhat of an empire.
It is a bold move, even for a business so clearly on the top of its game, to invest more in an expensive physical presence when the trends for most other clothing businesses are heading in the other direction.
Some have suggested Ashley’s monopolisation could be bought into question, however this would depend on whether Republic is categoried in the same part of the market as where Sports Direct already has a stronghold. In 2009 when Sports Direct bought 31 JJB stores, the Office of Fair Trading (OFT) referred it to the Competition Commission as the deal raised concerns about competition in five places, although the deal was later cleared.
Others such as independent analyst Nick Bubb have also suggested that Ashley has agreed to trade many of the stores for only six months, so the bricks-and-mortar portfolio will shrink in due course - although ultimately, it will still be a larger presence than he had before.
Some of the Republic sites could be converted into Sports Direct’s other retail chains, such as young fashion chain USC, while Republic own-brands including SoulCal, Fabric and Crafted could put into other Sports Direct fascias in the group helping to boost profits from the high margin product.
Either way Sports Direct’s move is bound to help edge the business in front of its rival JD Sports Fashion.
The deal is sure to receive mixed views from the industry. While it is of course fantastic that 2,100 roles have been safeguarded, many people will have concerns about the continued dominance of Sports Direct. As one commenter on the Drapers website said: “The power of Sports Direct is a worry.”
The sum paid for Republic has not been disclosed, but no doubt some of the £100m Ashley realised this week from his own Sports Direct shares will have gone towards it. The only question is whether he has enough left over to acquire a stake in department store chain House of Fraser.