Mysterious British billionaire acquires 10% stake in Amer Sports

Sporting goods dealer Mike Ashley sells expensive brands dirt cheap and cheap items with huge margins

print this

By Anssi Miettinen in London
     
      An intriguing new player, to say the very least, has acquired a large stake in the Helsinki-based sporting goods giant Amer Sports.
      Towards the end of the summer, Britain’s largest sporting goods retail chain Sports Direct announced it had doubled its holding in Amer to just over 10 per cent. The Sports Direct share of Amer Sports is currently worth in excess of EUR 120 million.
      Sports Direct is the creation of a mysterious British billionaire named Mike Ashley. The company was listed on the London Stock Exchange earlier this year. Ashley divested his own holdings in Sports Direct to the tune of nearly £1 billion (approximately 1,400 million euros), but still remains the principal owner of the firm.
      The Sunday Times recently listed Ashley as the 25th richest man in Britain. This year Ashley also became the owner of the Premiership football club Newcastle United.
      In spite of all this high-profile activity, very little is known in Britain about Mike Ashley. He has cherished his privacy with all the reclusive zeal of American novelists J.D. Salinger or Thomas Pynchon.
      There have been few if any interviews. Only very recently have photographers managed to capture his image in a public place - attending a game of football. Ashley lives in the countryside around 50 kilometres from London in a large mansion surrounded by high walls.
      The neighbours do not know anything about the man, and for the majority of his employees he is also an enigma.
     
This much is known, however: the 43-year-old Ashley has created his fortune out of nothing.
      Ashley was not big on attending school, but all the more interested in doing business. In 1982, at the age of 18, Ashley set up his first sporting goods store in his hometown.
      Today Sports Direct owns at least 465 outlets, 400 of them in Britain. The company has grown fast but at the same time it has remained nicely profitable – at least until the February float.
      The firm has acquired the ownership of several sporting equipment and clothing manufacturers, such as familiar tennis brands Slazenger and Dunlop. In September the company purchased Everlast, a legendary boxing goods label.
      Well-known brands that for some reason only sell moderately or poorly have been of particular interest to Ashley. Amer Sports, too, has a few such brands on its roster. For example in the world of golf, Wilson clubs have been in the doldrums for quite some time now, even though their fortunes were boosted by Padraig Harrington’s win at the 2007 Open at Carnoustie.
     
Ashley’s company has now grown so large that it can negotiate rock-bottom prices from it suppliers.
      The largest of the retail chains is Sports World, which has sold prestige brands like Nike, Reebok, and Adidas at knock-down discounts. With special offers and a “pile ‘em high” approach, the stores tempt in customers who then go on to buy Sports Direct’s own labels with a fat margin on sales.
      Not all suppliers - Nike for instance - have been completely enamoured of this practice of buying brands to then sell the products in Sports Direct’s own shops, cutting out the middle man and maximising the profit. Nike is hitting back by establishing a distribution deal that puts its own shop-in-shop locations into the stores owned by Sports Direct’s fiercest rival, JJB Sports.
     
During its brief history as a listed company Sports Direct has had to issue two profit warnings.
      Other than that the company has released very little information about its goings-on.
      Several of the Sports Direct board members have resigned after falling out with the principal owner over the way the company is run.
     
The plummeting of the company’s stock price after the listing on the LSE (it was floated at 300p in February, with a market capitalisation of £2,160 million, and the stock was trading at around £145 in early November) has upset the investors, but Ashley has remained unfazed. In July he uncustomarily talked to a reporter.
      “I’ve got balls of steel”, Ashley boasted in The Sunday Times. "Some investors have been great, and have been very supportive. But some of these City people act like a bunch of cry-babies."
      Ashley also said that "Sports Direct should come with a government health warning - this stock is not for the fainthearted".
      From Ashley’s bald statements one can detect that he must have smart advisers, who have managed to protect him thus far from the dangerous shoals of publicity.
     
Helsingin Sanomat / First published in print 5.11.2007

More on this subject:
 COMMENT: Not a lord this time

Links:
  Mike Ashley (Wikipedia)
  Amer Sports
  Sports Direct

ANSSI MIETTINEN / Helsingin Sanomat
anssi.miettinen@hs.fi