Ash­ley em­pire grows with res­cue of ri­val’s DW Sports

Frasers Group to save 922 jobs in £37m deal for gyms and stores owned by Dave Whe­lan’s fit­ness chain

The Daily Telegraph - Business - - Business - By Si­mon Foy

MIKE ASH­LEY has swooped on archri­val Dave Whe­lan’s stricken fit­ness em­pire DW Sports in a £37m res­cue deal to buy 46 of its gyms and 31 stores.

Mr Ash­ley’s firm Frasers Group pounced af­ter DW tum­bled into ad­min­is­tra­tion at the start of Au­gust.

Frasers will also get some stock, and could shell out an­other £6.9m for lease­holds.

The deal with Frasers – which owns House of Fraser and Sports Di­rect – will save 922 jobs that have been trans­ferred to Sports Di­rect In­ter­na­tional, ac­cord­ing to ad­min­is­tra­tor BDO.

How­ever, the agree­ment did not in­clude the DW busi­ness name and its in­tel­lec­tual prop­erty.

About 1,700 roles were put at risk when ad­min­is­tra­tors were called in three weeks ago.

Graham New­ton, a re­struc­tur­ing part­ner at BDO, said: “We are pleased to have achieved a sale of a sig­nif­i­cant part of the DW Sports busi­ness as a go­ing con­cern, as this will not only se­cure em­ploy­ment for the ma­jor­ity of em­ploy­ees, but should also re­sult in a re­turn to the com­pany’s cred­i­tors in due course.”

Mr Ash­ley’s ri­valry with 83-year-old for­mer Wi­gan Ath­letic owner Mr Whe­lan dates back two decades.

In 2000, Mr Whe­lan re­port­edly told his younger com­peti­tor: “There is a club in the North, son, and you’re not part of it.”

Later that year, Mr Ash­ley, 55, turned whistle­blower on ri­vals in­clud­ing Mr Whe­lan’s JJB Sports, re­port­ing them to the Of­fice of Fair Trad­ing over al­le­ga­tions that sev­eral out­lets con­spired to fix the price of foot­ball shirts.

The com­pe­ti­tion watch­dog is­sued mul­ti­mil­lion-pound fines to the re­tail­ers in­volved – in­clud­ing JJB.

Frasers said the DW deal com­ple­mented its ex­ist­ing gym and fit­ness club range. The sites will be run un­der its Ever­last brand.

It means the com­pany now owns all or part of more than 50 brands in­clud­ing video game chain Game, preppy fash­ion busi­ness Jack Wills and lux­ury firm Flan­nels. Mr Ash­ley’s re­tail em­pire said last week it would plough £100m into on­line ex­pan­sion and open stores in shop­ping cen­tres in an at­tempt to profit from the col­lapse of high street ri­vals.

The com­pany re­mains wed­ded to bricks and mor­tar at a time when many ri­vals are be­ing forced to dras­ti­cally re­duce their re­tail es­tates, but also wants to con­quer more of the dig­i­tal mar­ket.

An­a­lysts at Peel Hunt said: “Mr Ash­ley has a long record of buy­ing from the ad­min­is­tra­tor, but com­men­ta­tors have pointed out that the DW gyms... are hard to run very prof­itably.

“Frasers will doubt­less ar­gue that prop­erty-wise, it has bought a ten­ner for a fiver, but the main thrust of last week’s pre­lims was that the on­line strat­egy would be to the fore, so buy­ing more bricks-and-mor­tar as­sets is not aligned.”

DW was founded by Mr Whe­lan in 2009 and op­er­ated 73 gyms and 75 re­tail sites in the UK, but had al­ready re­vealed plans to shut 25 stores in July.

The com­pany made a loss of just over £20m for the 12 months to the end of March last year.

Shares in Frasers, which were trad­ing above 500p apiece in Fe­bru­ary, closed down 1.6p at 344.8p.

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