… in the UK.
If maverick businessman Mike Ashley – he’s the one the right – needed something to take his mind off the Newcastle United sale process, he’s certainly got it.
From the London stock exchange’s Regulatory News Service (RNS).
The OFT has indicated that it is conducting an investigation into a suspected overarching agreement to dampen competition in the sports retail market.
As part of those investigations, representatives from the OFT and SFO are visiting Sports Direct’s Head Office in Shirebrook today.
Sports Direct cannot comment further on the investigations at this stage.
Sports Direct’s philosophy is to promote competition in the sports and leisure market and its record demonstrates this. Sports Direct continues to offer best value to consumers.
Unsurprisingly, that’s hit Sports Direct (and by extension Ashley, who owns 72 per cent of the company) hard.
Although, we note Sports Direct – the UK’s leading sports retailer by revenue and operating profit – has enjoyed a hell of run in recent weeks, as several brokers have pushed the stock to its clients.
Even so, it is still some way from its February 2007 flotation price of 300p – a level it seems destined never to see again.
Of course, what’s also interesting here is the context . Rival sportswear group JJB Sports is also involved in the investigation.
From RNS.
JJB Sports PLC (‘JJB’ or ‘the Company’) confirms that it is assisting the Office of Fair Trading (‘OFT’) in an investigation it is carrying out in the sports retail market. OFT officers visited its offices in Wigan earlier today.
The investigation follows an approach that JJB made to the OFT on 30 January 2009 for immunity pursuant to the OFT’s leniency programme in relation to a suspected agreement or concerted practice to dampen competition in the sports retail market in the period from 8 June 2007 to 25 March 2009, being the period in which the former chief executive, Mr Christopher Ronnie, was employed by the Company. The directors take seriously JJB’s obligations under UK competition law and, since approaching the OFT, the Company has worked closely, and continues to cooperate fully, with the OFT and all aspects of its investigation.
Now, regular readers will know, there has been a bit of a row about a loan Ashley extended to JJB chairman Sir David Jones. And they will also know that Ronnie (referred to above) is an old friend and business associate of Ashley.
What a tangled web.
Update:
Citigroup, which helped bring Sports Direct to market, has delivered its verdict on the SFO/OFT investigation.
In light of this announcement, and the related increased risk profile of Sports Direct’s earnings, we have reduced our Sports Direct investment rating to Hold (from Buy) and risk code to Speculative (from High). Target price reduced to 115p (from 140p). This equates to a 9x April 2011E EV/EBIT multiple – we now apply a 10% discount to peers to reflect the higher risk profile of earnings forecasts in the context of this investigation
Related links:
The Bank of Mike Ashley – FT Alphaville
Through the keyhole with FT Alphaville – FT Alphaville
The tangled world of sports retailing- The Guardian