Sports Direct (lon:spd)
Sports Direct – Let’s Buy Jack Wills Because It Is Cheap?

Sports Direct Financials

ItemCurrent PeriodPrevious Period
Adjusted Earnings
Adjusted EBITDA
Statutory Profit£116m£23m
Adjusted Profit
Total Debt£826m£751m
Net Debt£378m£391m

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Title: Sports Direct – Let’s Buy Jack Wills Because It Is Cheap?
Company: SPD - Sports Direct
Share Price Then: 215p
Author: Ian Smith
Date: Tue 06 Aug 2019
Comments: It has just been confirmed that Sports Direct have bought Jack Wills for £12.7 million.

This means that they now have around 100 shops selling mid priced clothing to the under 30s and turning over around £140 million per year and making a loss.

It is hard to work out the real losses as there has been something in the region of £35 million of loans and investments recently. But when a major share holder is a private equity firm, Blue Gem, and they go down the prepack administration route it means that the losses are big and they have lost faith in the business.

Jack Will is a 20 year old business and maybe it has simply had its day, it is neither cheap or premium and as far as I can see apart from some items with Jack Will branding it is just a “me to” clothes retailer. In many ways it looks a bit like Superdry to me, relying on being trendy rather than its products.

Recently the founder Peter Williams was forced out and ex Debenhams Suzanne Harlow was brought it. It may be that given time the business has a future, as reading the specialist retail press I see lots of articles saying that Jack Wills simply lost touch with its market.

So does Sports Direct have a plan to develop the business?

Considering the mess that appears to be House Of Fraser, the massive amount of debt that the group has and the possible Belgian tax bill, along with Evans Cycles,, Game Digital it is hard to see where the money and management time will come from.

One of the first things that I saw was "We will look to work with the landlords to reduce the rents to keep as many stores trading as possible."

This makes me wonder if the plan is to close all the stores, blame the landlords for not dropping the rents and sell off the stock in House Of Fraser and Sports Direct.

As I understand it the distribution centre in Sheffield is leased rather than owned and it is unclear to me if the market is such that the lease could be reassigned easily, some people that I talk to say there is more demand than capacity in warehouse space.
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