Sports Direct is set to buy Sir Tom Hunter’s fashion brands in an attempt to move beyond discount sportswear.
The deal will give the sportswear retailer controlled by Mike Ashley access to premium brands including Alexander McQueen, Dolce & Gabbana and Barbour for the first time.
Sports Direct has proven unpopular with upmarket suppliers as a result of its rough-and-ready attitude to store environments and its discount strategy.
The company will announce today that it has spent £7 million in cash and a further £20 million in working capital in return for an 80 per cent stake in USC and Cruise, both of which are owned by Sir Tom’s investment vehicle West Coast Capital.
Sir Tom will remain as chairman of the new company to advise Sports Direct on building a “lifestyle” division and will retain a 20 per cent stake.
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Cruise, which was brought out of administration by Sir Tom this year, operates only ten stores, none of which are south of Leicester, which Sports Direct believes gives it room for growth.
USC is a young fashion brand with 40 stores. West Coast put it through a controversial pre-pack administration in December 2008 to shed the worst of its stores. It stocks brands including G-Star, Diesel and Firetrap.
Sports Direct, which is 72 per cent-owned by Mr Ashley, who also owns Newcastle United Football Club, is set to release its annual results on July 14.
The deal will enable the company to follow its smaller rival, JD Sports, into fashion. JD Sports owns the Bank and Scotts fashion chains along with its sportswear stores. Last month it acquired Cecil Gee from Moss Bros in an attempt to move further upmarket. Turnover at Bank and Scotts rose by 25 per cent to more than £100 million last year.
West Coast’s disposal of a majority stake in USC and Cruise comes seven months after it sold Office, the fashionable footwear retailer, to Silverfleet Capital for £140 million.