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Friday, December 3, 2021

Sports Direct buys 11% stake in French Connection

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Mike Ashley’s Sports Direct has bought an 11% stake in French Connection, raising fresh questions over the troubled fashion retailer’s future.

The maverick billionaire made his share raid after fund manager Schroders dumped a 9% stake on Wednesday, with Mr Ashley (pictured) hoovering up an additional 2% on the open market.

The Newcastle United owner has a history of building up positions in rival retailers, having previously bought stakes in Debenhams, JD Sports and privately owned House of Fraser.

It is unclear whether Mr Ashley intends to make a move to acquire the business.

French Connection, famous for its FCUK merchandise, already has commercial arrangements with Mr Ashley for its clothing to be sold in Sports Direct stores.

Mr Ashley’s manoeuvre comes at a difficult time for French Connection with the retailer battling falling profits and sliding sales.

To compound matters, a group of investors – Gatemore Capital Management OTK and Zoar Invest – are pressing for a boardroom shake-up.

Among their demands are forcing founder Stephen Marks to relinquish his double role as chairman and chief executive.

Mr Marks, who launched the business 44 years ago and holds a 41% stake, has struggled to revive French Connection’s fortunes following the rise of fast-fashion brands such as ASOS and Zara.

In September, French Connection recorded a half year pre-tax loss £7.9 million, with total revenue sliding 8.7% to £69.2 million.

French Connection said in a statement: “We note that Sports Direct has taken long-term significant stakes in a number of British retailers in recent years, and see this investment as a vote of confidence in the true potential of our company. We look forward to working with them more in the future.”

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