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UK's Sports Direct strikes deal to enter US market
[LONDON] British sportswear retailer Sports Direct has entered the US market by buying 50 stores trading as Bob's Stores and Eastern Mountain Sports at a cost of US$101 million, it said on Friday.
Sports Direct, founded and controlled by chief executive Mike Ashley, said the acquired stores sell predominantly sports and casual wear, and outdoor and camping equipment and clothing.
"The acquisition is expected to complete in the first half of May 2017 and will provide Sports Direct with a footprint in US bricks-and-mortar retail and a platform from which to grow US online sales," it said.
Sports Direct purchased the stores through the bankruptcy process of Eastern Outfitters, the parent company of Bob's Stores and Eastern Mountain Sports.
The British company received approval for the deal from the Delaware Bankruptcy Court on Thursday.
The US$101 million cost comprises loans advanced by Sports Direct to Eastern Outfitters before and as part of the Chapter 11 bankruptcy process, and purchases of the US firm's debt.
In the financial period to Jan 28, 2017, the acquired businesses made a pretax net operating loss of US$26 million.
Sports Direct has had a disastrous couple of years. Last year, British lawmakers condemned it for "Victorian" working conditions, investors and media criticised its corporate governance and trading was poor, with a series of profit warnings.
It warned in March that the devaluation of the euro against the US dollar would dent its gross margin.
Sports Direct's shares, down 21 per cent over the last year, were up 0.4 per cent at 316.5 pence at 0713 GMT, valuing the business at £1.76 billion (S$3.151 billion).
The US sporting goods sector is being tested by the advent of internet shopping and discount chains. Sports Authority, speciality golf retailer Golfsmith International Holdings and sporting goods manufacturer Performance Sports Group are among companies that filed for bankruptcy in 2016.