Sports Direct to sell Dunlop brand

American tennis player John McEnroe in action with a Dunlop branded tennis racket. (25-06-1984) Photo credit: PA/PA Wire.
American tennis player John McEnroe in action with a Dunlop branded tennis racket. (25-06-1984) Photo credit: PA/PA Wire.
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Retailer Sports Direct is to sell its Dunlop brand to a Japanese tyre and rubber company.

The retailer announced the £112m sale to Sumitomo Rubber Industries Ltd (SRI).

Sports Direct said the proceeds from the sale would be used “in its commitment to its third party brand relationships”.

In a statement, the company said it did “not currently have the bandwidth to develop and manage international brands simultaneously” and needed to prioritise its core UK businesses and relationships with third party brands.

The Dunlop business has a combined revenue of £42.64m, gross assets of £41.76m and profit before tax of £4.06m, Sports Direct said.

The acquisition will enable SRI to sell and produce Dunlop-branded products around the world, an SRI statement added.

SRI will also acquire Sports Direct’s sporting goods manufacturing and sales business of Dunlop brand products, and its licensing business for trademark rights.

Sports Direct will be able to continue using the Dunlop brand for workwear and safetywear for its own retail purposes under a royalty-free licence.

The transaction is conditional upon merger clearance in Germany and the Philippines. It is expected to complete, if merger clearance is granted, before May 31.

The price was in cash, after net debt and working capital on completion.

Sports Direct is owned by controversial businessman Mike Ashley, who also owns Newcastle United Football Club.

Mr Ashley’s retail empire endured a choppy year, punctuated by revelations that Sports Direct staff had been forced to stomach “Victorian working conditions” while being paid below the national minimum wage.

After initially snubbing a showdown with MPs, the billionaire tycoon appeared before the Government’s Business Select Committee in June, where he admitted under-paying staff and received a grilling over the firm’s controversial use of zero-hour contracts.

Unite assistant general secretary Steve Turner weighed into the retailer during the session, saying its Shirebrook warehouse in Derbyshire was more like a workhouse or gulag.

Mr Ashley vowed to shore up conditions within 90 days, including an overhaul of the factory’s security searches, deemed the root cause of staff being paid below the amount required by law.

But it was not long before Sports Direct faced fresh condemnation from its investors.

Shareholders urged Sports Direct to shore up its corporate governance by overhauling its board of directors and launching an independent review into working conditions ahead of its annual general meeting (AGM) in September.

It would lead to investors venting their dismay by voting 53 per cent against the reappointment of chairman Keith Hellawell, but the move proved fruitless as Mr Ashley, who owns 55 per cent of the company, ensured he remained in post.

The shareholder rebellion came during a tumultuous AGM at Shirebrook where Mr Ashley threw open the doors to the public to show the firm’s progress since its public flogging in March.

But attempts to confound the naysayers unravelled when the billionaire joked that he had been to the casino and pulled a wad of cash from his pocket while demonstrating a mock security search to journalists and investors.

Sports Direct ended a tough 2016 with a warning that trading was not going to get any easier next year after a slump in first-half profit.