Frasers Group, the UK retailer controlled by Mike Ashley, has built an almost 10 per cent stake in struggling US sportswear maker Under Armour. Frasers acquired 16.6mn shares in Under Armour, or 8.8 per cent of the company, according to a filing on October 1 with US regulators. The UK company, which is best known as the owner of Sports Direct, has a record of snapping up stakes in other retail chains. It has also been on a dealmaking tear overseas as it seeks to grow beyond its home market. Last month, it raised its stake in German fashion brand Hugo Boss to 48 per cent, a move that came a month after the company acquired struggling UK department store Harvey Nichols.
Founded by former American football player Kevin Plank in 1996, Under Armour enjoyed explosive growth as it took market share from Nike and Adidas. But shares in the Baltimore-based company have plunged since peaking in 2015, after a botched expansion into athleisure wear hurt investor confidence. They closed at $4.88 on Tuesday. Plank, who is attempting to revive the brand, said in August he was focused on simplifying the business and selling more premium goods at full price, which typically have better profit margins than discounted goods.
The retailer posted a 3 per cent fall in revenue to $1.1bn in the three months to the end of June, dragged down by a weak performance in North America. Plank said the brand was facing a challenging consumer demand environment, an issue also affecting many of its larger peers. Those include Nike, which last week set out plans to cut jobs and said it was expecting a decline in revenue in the coming year as sales stalled in markets from the US to China.
Last year, Frasers acquired The Webster, a US luxury retailer, while in Australia it built a sizeable stake in footwear retailer Accent Group and in June it launched a hostile takeover bid for the business. Frasers has also expanded through acquisitions in South Africa as part of a broader push to build an international retail group. Group revenue rose 8.7 per cent to £5.3bn in the year to April 26, driven by international revenue growth of 59.2 per cent.
Source: Financial Times Companies · Summarized by HeadlinesBriefing