The hard-headed billionaire, Sports Direct retailer Mike Ashley, has for years been a pantomime villain of Britain's financial press.
But over the last week, the Newcastle United owner has also been hailed in the UK as potentially the "saviour of the high street", after Sports Direct agreed a £90 million (€100.5 million) deal to buy House of Fraser department store group out of administration.
However he is seen in his native Britain, where Sports Direct’s working conditions are often under intense scrutiny, how should we view Ashley over here? Probably as one of the most influential investors in the Irish retail sector today.
With sales of £3.4 billion, Sports Direct is king of its castle in sports retailing in Britain. But, local rivals, take note: Ashley now has major plans for its operations in the Republic.
Although he isn’t a favourite of Newcastle fans in the UK, Ashley is said to be amazed at the amount of Toon followers here who recognise him when he visits Ireland and approach him in the street. They may soon see a lot more of him.
“What’s our aim for Ireland?” said Leonard Brassel, the managing director of Sports Direct Ireland. “In a word: growth. We have an aggressive investment programme to roll out.”
Sports Direct has pencilled in Ireland for a raft of “new generation” store openings, with a focus on large-format flagship outlets.
It has taken Ashley 16 years to build up his Irish interests since he entered the market here at the age of 37. What has he accumulated in Ireland to date?
Through his 60 per cent stake in London-listed Sports Direct, where he is also chief executive, Ashley's group is now the third-largest sportswear chain in the State. And it has recently embarked upon an ambitious Irish expansion plan that has put its indigenous rivals, Lifestyle and Elverys, in its sights.
Ashley also owns Heatons, the €230 million-a-year department store chain that ,in recent months, has seen many of its stores rebranded to Sports Direct.
Between Heatons and Sports Direct, Ashley operates from more 30 locations in the Republic, including a dozen remaining standalone Heatons stores. Many of the Sports Direct outlets are far larger, however, than those of local rivals.
There are a further 16 Sports Direct stores in the North, of which 10 have been upgraded and were formerly Heatons. The others are pencilled in for revamps.
He also owns a 30 per cent stake in the listed retailer Debenhams, which has 11 department stores in the State. In 2016, he tried to buy the whole Irish operation out of examinership – two years after failing with a similar tilt at Elverys.
Ashley is also believed to want to buy shops from Dunnes Stores, as part of a strategy to expand the number of Sports Direct megastores here. He is also rumoured to retain an interest in opening on the site of the old Clerys store.
He bought another old-school Dublin retail site, Boyers, for €12 million in 2016. And now he is on the verge of taking over the huge Dundrum outlet of House of Fraser, once that deal is approved by Irish competition regulators.
He has even struck sponsorship deals with the GAA and the FAI. Forget Newcastle United. At this rate, Ashley may as well buy Shamrock Rovers and call himself Mick.
Elevation strategy
According to Brassel, Sports Direct Ireland, as the Heatons organisation has morphed into, is renovating its local estate at the rate of about two stores per month. He expects this to continue for the next “12-18 months”.
Sports Direct was previously co-located with Heatons in large tracts of the more than 50 department stores that previously existed in Ireland – North and South. Ashley took full control of Heatons two years ago for €48 million.
Sports Direct has now been prioritised over Heatons. In the last year or so, the group has also opened three standalone Sports Direct stores in Kilkenny, Liffey Valley in Dublin, and by far the most notably, North Earl Street in Dublin city.
The 14-month-old flagship megastore in the old Boyers building encapsulates Ashley's new "Elevation" strategy. It is focused on bringing Sports Direct – traditionally associated with a stack 'em high approach – upmarket, via huge, experiential stores tailored for big, premium brands such as Nike and Adidas.
Give the well-known brands more space in better stores, the theory goes, and they’ll give you better partnership deals while you increase sales and margins.
The plan also involves co-locating Sports Direct with other group-owned fashion retail outlets, such as the youth label chain USC that opened for the first time in Ireland as part of the North Earl Street megastore.
(USC stands for US Collective, as opposed to the not-so-much-loved Universal Social Charge, its local fiscal namesake).
When the 3716 sq m (40,000 sq ft), six-floor North Earl Street outlet opened last summer, Ireland football manager Martin O’Neill was on hand to cut the ribbon. “I can’t get over the size of it,” he exclaimed in a live on-site RTÉ radio interview. It was far larger than the 1,850 - 2,780sq m (20,000-30,000 sq ft) typical of its larger UK stores.
But, as Brassel explains, the Elevation strategy means that Sports Direct is already looking past the North Earl Street-style flagship. Its thinking has evolved for the Irish market: it now wants bigger, much bigger.
"At the time we opened it, North Earl Street seemed so much larger than anything else we normally did," said Brassel, the former Dealz executive who Ashley hired two years ago to spearhead the Irish expansion. "But in the meantime, we have since realised that, in fact, it isn't big enough. Not with the Elevation strategy, co-locating with other fascias and creating enough room for all the brands."
Sports Direct is now on the hunt for monster outlets of over 9,290 sq m (100,000 sq ft) in the Irish market, the same size at its new Thurrock outlet in England.
Unless they’re new builds, there can only be a small number of potentially suitable locations large enough in the State. Perhaps an old Dunnes outlet or two. Maybe House of Fraser in Dundrum. As an outside bet, could Clerys even come back into view? It is currently up for sale, after all.
Brassel declined to give details, but he confirmed the overall desire for a handful of huge new outlets in Ireland: “We are actively engaged in various levels of discussions, negotiations and potential deals, in Ireland, North and South. We’re looking at major towns and cities.”
In Britain, as part of the Elevation plan, Ashley has also sought to co-locate flagship Sports Direct stores with his group-owned Everlast gyms.
There are rumours that he may look to combine some of his existing Flannels upmarket fashion outlets with the House of Fraser stores he has just acquired, as part of a plan to turn them into the “Harrod’s of the High Street”.
In recent months, Sports Direct has introduced yet another new retail fascia to Ireland – Brandmax. Does Brassel believe Ashley will eventually bring the Flannels and Everlast names to the State, as he has done with USC?
“Yes, I believe so,” he said.
“The board and Mike make the decisions about where to invest. They see Ireland as a huge opportunity, and they are delighted with the programme over here so far, and the reaction to Sports Direct.”
Upmarket business
Ashley hasn’t yet convinced everyone of the merits of his wider group growth strategy. Market analysts in the UK are speculating that Ashley may eventually look to combine House of Fraser with struggling Debenhams, which could require Sports Direct making a bid for the 70 per cent of the latter it does not own. That would obviously mean major implications for Debenhams in Ireland.
It might also involve courting the financial establishment that the maverick Ashley so despises – he recently won a £15 million court battle against a former investment banker, who claimed Ashley regularly oversaw boozy business meetings, and once even threw up in a fireplace after 12 pints.
There are rumours that Ashley-run department stores could have entire Sports Direct floors, which might take some explaining to the sort of well-heeled customers you might normally find in House of Fraser in Dundrum.
"He [Ashley] clearly wants to pull his business upmarket, to keep Nike and Adidas happy," said independent UK retail analyst, Nick Bubb, who claimed some of its British stores are seen as "scruffy".
“But I think he will over-reach himself with House of Fraser, which is in a terrible mess.”
Still, if he can implement a successful expansion in the Irish market from a beachhead of new flagship stores, Ashley may be able to hold it up as sure proof to doubting analysts that his vision is one of the future.
Dublin-based, UK-born retail expert Linda Ward, who runs the consultancy Retail Renewal, thinks Ashley is, "to a degree. . . swimming against the tide" by investing heavily in "high street" stores even while traditional bricks-and-mortar retailing is coming under pressure from online.
“He sees it as a big opportunity. Maybe he’s the smart one,” she said.
She also knows better than most the challenges that British retail groups can face when they tackle the Irish market. When Debenhams first entered Ireland about 20 years ago, long before it bought the Roches Stores chain, Ward ran the group's only outlet here – in the Jervis Street centre.
Some British retailers, she said, fall into the trap of seeing the State as some sort of test-bed for the UK market. This is wrong, Ward said, as the Republic is a totally different retail market. Strategies cannot necessarily be replicated on either side of the Irish Sea.
“Shopping in Ireland has always been much more local than in the UK, more personalised. You don’t have as many large population centres here to draw business from. The Irish main street is much different to the British high street. British retailers often think it’s the same but it is not.”
Perhaps Ashley has been around Ireland for long enough to understand this by now. After all, he spent 14 years on the board of Heatons until 2016.
In any event, the Irish strategy is implemented by the Dublin-based Sports Direct Ireland management team, led by Brassel. They clearly understand the local aspect.
Brassel notes that Sports Direct has recently signed sponsorship deals with five local GAA clubs: Clane in Kildare, Bellaghy in Derry, Listry in Kerry, Ballygunner in Waterford and St Dominic’s in Roscommon. If Ashley thinks being involved with the Toon army is a colourful experience, just wait until somebody hands him a hurl and a sliotar.
