Sports Direct International, the company formaly called Sports World International that acquired Original Shoe Company, acquired in May 2006, sees potential for 250 Original Shoe stores in the UK. In a first phase, Sports Direct budgets the net addition of 60 Original Shoe stores, doubling the current size of the British shoe retail chain. Some small Hargreaves, Gilesports and Streetwise stores, also acquired by Sports World in 2006, will be converted to the Original Shoe format.
The chain will be the center of a new store concept for the group, offering a premium outlet with more fashionable products from leading suppliers, to attract customers put off by the crowded environment and price-focused approach of Sports World, its other major retail chain. In addition to shoes from the Adidas, Nike or Puma, it will sell for example shoes from Caterpillar, Converse, Rockport and Timberland, and apparel by Ben Sherman, Henri Lloyd and Lacoste. That will put it in more direct competition with the John David Group, which has since 2005 tried to reposition itself as an up-market, fashion-oriented retailer.
The former Sports World bought Original Shoe Company and its 54 stores last year for £4.5 million (€6.7m-$8.8m). Sports Direct went public on the London Stock Exchange on Feb. 27 at 300 pence a share, a price close to the top of an intended range of 250-310 pence. The quotation gave Mike Ashley’s former Sports World International a whopping stock market capitalization of £2,160 million (€3,200m-$4,240m), more than three times the value of JJB Sports. However the price fell immediately to around 285 pence and subsequently remained around that level. Merrill Lynch, coordinator and bookrunner of the IPO, was authorized to buy up to 46,440,000 shares over the subsequent four weeks if needed to stabilize the stock market price.
Ashley has sold 43 percent of his equity in the company, resulting in gross proceeds of £928.8 million (€1,378.0m-$1,825.9m) for the most astonishing entrepreneur in the British sporting goods industry. He has built the company up from scratch in only a few years, initially trading as Sports Soccer. Its holdings include many sports and leisure brands including Dunlop, Kangol and Lonsdale. The price offered for his shares was partly based on projected earnings before amortization and depreciation (EBITDA) of £200 million (€297m-$389m) for Sport Direct during the financial year ending next Apr. 29, rising to £260 million (€386m-$506m) in the subsequent one. The group’s revenues are expected to grow to around £1.4 billion (€2.1bn-$2.7bn) for the current financial year and to an indicated £1,566 million (€2,327m-$3,048m) for the next one