Sports Direct International (SDI) has reportedly struck an alliance with Modell's Sporting Goods, a U.S. sporting goods retailer, to potentially take over between 100 and 200 store leases of The Sports Authority (TSA), the big American sporting goods retailer that filed for bankruptcy protection in March, as well as its brand name and some of its staff. The Wall Street Journal reported this week that the British retailer's involvement in these advanced discussions emerged from court papers.
SDI's interest has the potential to significantly impact the U.S. sporting goods market – should it succeed in acquiring most of these leases and use them as a base to expand its hard-hitting business model in North America. It could also transform the international business of SDI, which has been spreading in European markets with acquisitions and store openings. The company has already been striving in the last years to grow its wholesale business in the U.S. market.
Going-out-of-business sales are taking place at about 450 Sports Authority stores that were not among the 120 stores closed earlier in the proceedings. TSA's liquidation is supposed to be wrapped up in July. The retailer sold its inventory to liquidators in a bankruptcy auction in May, after it failed to attract a buyer for the entire company. SDI has yet to answer queries on this potential buy.
SDI is clearly on an acquisition drive, which should help to spur the retailer's growth amid sluggishness in some European markets. The company has already been involved in talks to acquire several retailers in the last years – the latest of them being BHS, a British retailer selling clothing and home appliances whose collapse could lead to 11,000 job losses.
This interest was confirmed on June 7 by Mike Ashley, SDI's majority shareholder, at a parliamentary select committee hearing on working conditions at SDI's warehouse in Shirebrook. The same committee for skills, business and innovation is investigating the circumstances of the failure of BHS.
Against the advice of the public relations adviser who sat next to him at the hearing, Ashley blurted out that he “100% wanted to buy” BHS and that he envisaged the use of BHS locations for selling space dedicated to Sports Direct. It transpired in British media in the next days that he intensely worked on the buy but the proposed deal was reportedly scuppered due to time pressure and a lack of certainty regarding pension issues.
