One of retail tycoon Mike Ashley’s key lieutenants has said that the Sports Direct group is not in crisis, and will continue to buy struggling retailers if the right opportunities arise.
Michael Murray, who is engaged to Mr Ashley’s daughter, was speaking 24 hours after the sportswear and retail giant sealed a £12.75m deal to buy fashion chain Jack Wills out of administration.
It is the latest in a string of acquisitions by Mr Ashley as he seeks to capitalise on a retail downturn that has seen many established brands collapse or seek rescue deals.
The Jack Wills deal came just days after the chaotic publication of Sports Direct’s annual results, which were delayed several times after the company received a £605m tax bill from the Belgian authorities the previous evening.
Mr Murray, who led the Jack Wills purchase and runs a new division focusing on brands and refreshing Sports Direct’s shops, said perceptions the company is in crisis are wrong.
“I can understand why people would think it, but it’s definitely not a business in crisis,” he said.
“There’s not a lot you can do about a letter that arrives the night before [from the tax authorities] and it is out of your control.”
Mr Murray also defended the decision to buy House of Fraser, which Mr Ashley said last month had “terminal” problems.
“Some win, some [you] lose, but ultimately we’re having a go, and we believe in ourselves,” he said.
“We’re determined, we work very hard, we’re not thinking about the short term, we’re thinking about the medium to long term, the next generation of Sports Direct consumers and shareholders. Short term we may be wrong, but long term we back our decisions.”
Mr Murray, Sports Direct’s head of elevation, said the Jack Wills brand had over-extended, opening too many shops and failing to develop its brand.
As with previous Sports Direct acquisitions, he will seek to renegotiate what he called “extortionate” rents with landlords but warned some of Jack Wills’ 110 stores may have to close, endangering the 1,700-strong workforce.
“For the foreseeable future we will try and keep as many stores as possible, but the business has historically chased retail direct-to-consumer sales and has over-extended itself into multiple locations paying extortionate rents,” he said.
“The rents in these historic locations will need to come down but we have great relationships with the landlords and we will be looking to work with them to save as many stores as we can.
“Some will have to close if we can’t get the right rental deals but we believe we will be making fair offers to landlords and work collaboratively with them.
“It is impossible to say if we keep 80% or 90% of the stores. I’d like to keep all of the stores but it is not realistic to think that all the landlords will [reach deals]. I can’t guarantee a number of jobs, but I can say I believe the majority of stores will be kept.”
Mr Murray said Sports Direct would continue its strategy of buying troubled retailers if opportunities arose, and said the idea the entire business was run by Mr Ashley, who does not have a computer on his desk and receives daily takings reports from every shop on paper, is mistaken.
“The perception is that it is just run by Mike, but it’s definitely not the case. I really pushed for this transaction, I was the one who got behind this new division buying brands, diversifying our portfolio, so it is not a business run solely by Mike and we are bringing in new talent.
“We are always opportunistic, so if opportunities present themselves where believe there is marriage value to the group we will always look at them.”
