Sports Direct shuts several Debenhams concessions to focus on own flagships

By

Sandra Halliday

Published
Oct 6, 2017

Sports Direct entrepreneur Mike Ashley may be buying up chunks of Debenhams shares but his confidence in the chain’s prospects doesn’t seem to extend to his concessions in its department stores.

The company has closed almost half of its Debenhams concessions but insisted that it remains committed to its presence in the store chain that began back in 2014.

Four out of its nine shop-in-shops have been closed, including two in the Debenhams Oxford Street flagship in central London, the department store company has confirmed.

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So what’s behind the move? Sports Direct said the strategy change is a "direct result of overlap with locations for future or current flagship stores.”

As mentioned, the overall success of Debenhams remains important to Mike Ashley with Sports Direct holding over 20% of the firm’s shares. Around half of its stake is held directly, with the rest being via a ‘put’ option that is a gamble on the weak share price eventually rising.

Ashley has said very little about his intentions towards Debenhams, which is currently trying to effect a turnaround under still-new CEO Sergio Bucher.

He has however saids that the group is focused on “opportunities that will deliver benefits for our customers, enhance our commercial relationships or retail channels, selectively grow our market share, and/or further diversify our operations.”

Debenhams is now left with only five Sports Direct concessions in stores in southern England while the sports retailer’s growth plan seems to be more about opening large-size flagships. 

Ashley and his team have been investing in larger stores as part of his aim of becoming the “Selfridges” of sport retailing. His investment in flagships with a more upscale feel is key to attracting leading brands as competition for the rights to sell the most popular sport shoe launches is intense. 

Rival JD Sports has shown itself to be adept at attracting big name brands, but Sports Direct announced something of a coup during the summer with Japanese brand Asics planning to open self-managed spaces within the sport chain’s most premium stores. 

Sports Direct has invested over £300 million in its flagships so far and said that new or converted stores are trading strongly.