THE retail world has certainly thrown up its fair share of mavericks. Bhs-to-Topshop owner Sir Philip Green is not one to be told how it should be done. Mike Ashley is another.
Fans of Newcastle United have a love-hate relationship with the club’s owner who has not always found favour in the City. But the majority shareholder in Sports Direct does know how to turn a profit, and for that reason alone few would choose to argue with him.
His swoop on a near-5 per cent share in department store chain Debenhams is typical of another of his traits: spotting a good deal. He has certainly become one to watch when he takes an interest and makes his move.
The market is weighing up what his acquisition of 4.6 per cent of the company actually means, though it looks unlikely that he is preparing the way for a bid.
Instead, he seems to be keen on some form of tie-up, or partnership with one of the country’s best-known retailers which, in turn, has said that it is open-minded about such an opportunity.
Debenhams is in a weakened state, having reported poor festive trading figures and parted company with its finance director on the back of the profit alert. It is looking to improve its performance across all platforms.
The company’s shares took a hit in the wake of the profits alert and so anything that will give it a lift is bound to excite the board which will have an eye on Ashley’s record. While rivals such as JJB Sports have bitten the dust and retailers generally have struggled in a tough market, Sports Direct just keeps on growing. It now has about 400 stores across Britain through a mixture of acquisitions, rising online sales and the demise of its main competition. Its value-led offering has proved popular with consumers strapped for cash.
What Ashley is likely to have in mind is an opportunity for more in-store concessions. At a time when the high street is struggling and bricks and mortar is out of fashion, even expansive groups such as Sports Direct are looking at the wisdom of having too much capital tied up in a large network of stores. Sharing floorspace with another retailer is therefore providing an access to more customers without the need to acquire leases. Furthermore, these outlets are in prime locations: shopping malls and leading high streets with high footfall.
Some Debenhams backers, however, may not take too kindly to an Ashley invasion. His stack ’em high, sell ’em cheap style will not go down well with those who prefer to see Debenhams as more in line with John Lewis and the mood among some retail analysts is that it ought to be following its department store rival by moving further upmarket, rather than rooting itself in the discount sector.
There is one other factor at play here and that is the shared ambitions of the two companies across Europe where both have set their sights on a greater presence.
Whatever, the reason for Ashley’s move, it adds to other investments in the retail sector that show, at least, that he intends to be one maverick whose motivations and methods cannot be ignored.
Suntory’s takeover price leaves investors beaming
THERE had been rumours that Suntory was targeting Beam, but yesterday’s capture of the US firm came at a price that few expected.
Matt Shattock, Beam’s chief executive, is now the toast of the markets after securing what is regarded as a substantial premium of the business.
The deal propels the Japanese company into third place on the list of global drinks firms and is one of the few big acquisitions that was available in a largely mature market. It was also out of reach of either Diageo or Pernod Ricard, respectively biggest and second biggest, although there has been speculation that they may have mounted a joint offer leading to a break-up of the group.
Among Japan’s bigger companies Suntory has been particularly acquisitive, mopping up the Lucozade and Ribena brands from GlaxoSmithKline, though the Beam deal probably rules it out of the bidding for whisky firm Whyte & Mackay.