ASHLEY BUYS RIVAL’S BUST GYM FIRM FOR £37M
MIKE Ashley has snapped up the bust gym chain owned by his long-time rival Dave Whelan.
The retail billionaire’s Frasers Group announced that it was buying 46 leisure clubs and 31 retail outlets from DW Sports Fitness for £37m, saving 922 of the company’s 1,700 jobs.
But in his latest snub to Whelan, Ashley will not be buying the DW Sports brand or any of its operating know-how. Instead, he will merge the assets under Frasers’ Everlast brand.
The two British tracksuit and trainers tycoons have been embroiled in an acrimonious feud for decades. In 2000, Bradford-born Whelan reportedly told Ashley, who is from Walsall in the West Midlands: ‘There is a club in the north, son, and you’re not part of it.’
Ashley later hit back, reporting Whelan’s JJB Sports to the Office of Fair Trading for allegedly price-fixing football shirts.
The resulting investigation, which penalised a number of companies, saw JJB slapped with a £6.3m fine.
Whelan, the 83-year-old former Wigan Athletic football club owner, founded DW Sports in 2009 when he bought 50 JJB Sports fitness clubs and their shops out of administration.
But the company tumbled back into administration this month, after making a loss of over £20m for the 12 months to March 2019.
Ashley, who for the past couple of years has been buying troubled High Street businesses such as House of Fraser and Evans Cycles at knock-down prices, was quick to swoop in as administrator BDO began breaking up the business.
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.’
But the deal raised eyebrows around the
City. Analysts at Peel Hunt said the DW outlets are so-called wet gyms, which have a swimming pool, and are ‘hard to run very profitably’.
They added: ‘Frasers will doubtless argue that property-wise it has bought a tenner for a fiver, but the main thrust of last week’s preliminary results was that the online strategy would be to the fore, so buying more bricks-and-mortar assets is not aligned.’
Frasers said it could spend a further £6.9m buying more of DW Sports’ leaseholds.
Though Frasers’ results released last week for the year to April 26 were largely better than expected, the firm admitted it had been the ‘most challenging’ year in its history, as profits slid by 20pc to £143.5m.