“Sports Direct, UK ” could expand into the ” Gym / Fitness Club-chain industry” after opening talks to buy up to 33 gyms from LA Fitness, UK “….The talks represent another surprise move from the founder of the retailer, which has already bought stakes this year in “House of Fraser” and “Debenhams”..
Mr Ashley is in talks to acquire the leases on the LA Fitness gyms after the troubled company was forced to dispose of sites through a company voluntary agreement. It is unclear how Mr Ashley will brand the gyms but it is understood they will be operated by Sports Direct..
It is not unusual for a sports retailer to move into the Gym / Fitness Club-chain industry. Sports Direct’s rival JD Sports opened a gym in Hull earlier this year while Dave Whelan, the founder of JJB Sports, created DW Sports Fitness Clubs.
Sports Direct is likely to use its own sports-wear brands – such as Dunlop, boxing range Everlast, and fitness brand LA Gear – extensively throughout the new gyms.
LA Fitness runs 80 fitness clubs, including the 33 earmarked for sale…The company is owned by banks and its management team after being forced to restructure its finances in the face of fierce competition from traditional rivals such as Fitness First and up-and-coming budget chains such as The Gym Group..
Fitness First was rescued through a £550 mil debt-for-equity swap, which saw US hedge funds Oaktree Capital Management and Marathon Asset Management take control from BC Partners..
Fitness First is understood to have examined the LA Fitness leases that are up for sale but wants to focus on expanding in London. The majority of the 33 sites are outside the M25. They include clubs in Belfast, Birmingham and Manchester..
If Sports Direct secures the deal then it is likely to look for more gyms to acquire. Mr Ashley has offered landlords a guarantee on the lease from Sports Direct, offering security for property companies. Sports Direct declined to comment.
The move into gyms could open a new avenue of growth for Sports Direct. Revenues and profits have been increasingly rapidly in its high street stores following the demise of main rival JJB…Shares in Sports Direct stand at 768p, more than double its float price in 2007.
However, Mr Ashley, who also owns Newcastle United, has a tempestuous relationship with the City….Shares in the company have fallen from a record high of 922p, in April after Mr Ashley sold more than £200 mil, of his stake in the retailer..
The share sale came just days after Sports Direct was forced to shelve a £70 mil, bonus for its founder due to opposition from shareholders.
Dave Forsey, chief executive of Sports Direct, said the company was “extremely disappointed by investors blocking the share award and warned that it could lead to “further uncertainty in the future ”…The company is yet to make public its intentions for the minority interests in “Debenhams” and “House of Fraser”.
Michael Sharp, the chief executive of “Debenhams”, said last month that he is talking to “Sports Direct” about placing its sports brands in “Debenhams” department stores.
“Sport Direct” owns 11 % of “House of Fraser”, with Chinese conglomerate “Sanpower” holding the remaining 89% …!!