Top executives of Sports Direct and Debenhams are set to meet on Thursday following the Mike Ashley-controlled sports goods retailer’s swoop on Debenhams’ shares 10 days ago.
Dave Forsey, chief executive of Sports Direct, and Michael Sharp, chief executive of Debenhams, are expected to meet for the first time following the intervention. Mr Ashley, the retail billionaire who owns 62 per cent of Sports Direct, is not expected to attend the meeting. It is understood Mr Forsey has been at the forefront of Sports Direct’s efforts over the past 10 days.
Sports Direct announced last week that it had spent about £50m taking a 4.6 per cent stake in Debenhams, which unveiled a severe profit warning on New Year’s eve and announced the departure of its finance director just a few days later.
However, last Thursday, Sports Direct announced that it had sold the stake, making about £5m. But Sports Direct also struck an unusual derivative arrangement that could result in it taking on an almost 7 per cent stake in Debenhams in 2015, if shares in the department store chain fall.
It is expected that Mr Forsey will outline Sports Direct’s intentions to Mr Sharp when they meet.
People familiar with Sports Direct’s plans have suggested that it wants to put its products into Debenhams’ stores, which have a surfeit of space.
Sports Direct is also considering injecting celebrity-sponsored sportswear ranges into Debenhams. These would be the sporting equivalent of Debenhams’ exclusive designer collections, according to people with knowledge of the plans.
Other options include developing exclusive designer ranges incorporating some of Sports Direct’s stable of in-house brands, such as Dunlop, Slazenger, Everlast, Kangol and Firetrap, and expanding Debenhams’ sportswear offering.
It is expected that Debenhams will consider the proposals put forward by Mr Forsey.
Shares in Debenhams have fallen from about 83p before the stake sale was announced to 79.75p at Wednesday’s close. Shares in Sports Direct fell 0.5 per cent to 710p on Wednesday.
Both sides declined to comment on the meeting.
Nevertheless, investors and analysts will be keen for any indication of Sports Direct’s intentions and the reasons for the derivatives arrangement. This involved a two-part transaction: selling Sports Direct’s original 4.6 per cent equity holding in Debenhams and writing a put option allowing a counterparty to sell it a larger stake.