Sports Direct has become one of the most prominent brands in British retailing during recent years, largely due to the business prowess of founder and chief executive Mike Ashley. The Newcastle United owner has already made waves with the City this year by acquiring stakes in both House of Fraser and Debenhams, and has now turned his attention to gym brand LA Fitness as a means of further expanding his empire through infiltration of the leisure industry.
Mr Ashley is currently in talks with LA Fitness with the aim of acquiring leases of a number of properties, after a company voluntary agreement forced the brand to offload a number of sites due to uncertain financial circumstances. It is believed that, if successful, Mr Ashley could acquire a total of 33 branded gyms – almost half of the chain’s 80 outlets.
While Sports Direct has so far declined to comment on the ongoing discussions, it is clear that the acquisition of a large portfolio of gyms could significantly benefit the company. Should the gyms fall under the control of Sports Direct, the retailer would be able to use its own sportswear brands including Dunlop, Everlast and LA Gear in on-site retail concessions, whilst the brand’s dedication to sporting excellence would be reinforced by the deal; although, at this point, it is unclear whether the gyms will remain under the LA Fitness brand or take on a new identity under the ownership of Sports Direct.
This would, of course, not be the first time a high street sporting goods retailer has forayed into the gym industry in the UK, as Sports Direct’s key rival JD Sports has recently launched its first fitness property in Hull. Meanwhile, founder of JJB Sports Dave Whelan has enjoyed great success with his range of DW Sports Fitness Clubs.
Given the competitive nature of the gym industry in the wake of the recession, it can only be presumed that Mr Ashley will not be the sole bidder for the 33 prime branches on offer, most of which are in locations such as Belfast, Manchester and Birmingham. However, it is understood that budget chain Fitness First has already bowed out of the running, having examined the leases on sale but choosing instead to focus on expansion within its key London market.
With Sports Direct currently looking to stock its sporting ranges in Debenhams, as confirmed by the department store’s chief executive Michael Sharp, it seems that the growing brand is as keen as ever to venture into new areas in which revenues and profits can be increased.
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