Sports Direct is selling Dunlop, the sportswear brand known for its green flash tennis shoes, to a Japanese buyer in a surprise $137.5m (£112m) deal.
Sumitomo Rubber Industries confirmed that it will acquire the trademark rights of the Dunlop brand overseas, as well as its sporting goods and licensing businesses.
Sports Direct’s founder and major shareholder, Mike Ashley, acquired Dunlop Slazenger for an estimated £40m in 2004 from Royal Bank of Scotland – which had taken control of the struggling business from its private equity-backed owners – three years before he floated his sportswear retail chain on the stock exchange.
The 107-year-old Dunlop brand is associated with many sports including tennis, squash, badminton and golf. Its gear has been used by sporting figures including tennis champions Rod Laver, John McEnroe and Steffi Graf, as well as golfers such as the 2011 British Open winner Darren Clarke and the former world number one Lee Westwood.
In a statement, Sports Direct 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 made a pre-tax profit of £4m on sales of £41.8m, the retailer said.
Sumitomo Rubber Industries, originally called the Dunlop Rubber Company, has a tyre business as well as a sports division that makes tennis and golf equipment. It already owns the rights to the Dunlop brand for other markets.
Sports Direct has had a difficult 2016, in which criticism of its working practices was compounded by weak trading. In December, the retailer revealed that profits had more than halved to £71.6m in the six months to 23 October. At the time, the company’s chairman, Keith Hellawell, blamed an “extreme political, union and media campaign waged against this company” for damaging its reputation.
An undercover Guardian investigation last year exposed the fact that Sports Direct workers were being paid less than the minimum wage. A scathing parliamentary committee report later compared conditions at its Shirebrook warehouse to a Victorian workhouse. Since then, the company has been forced to give £1m in back pay to workers and offer staff guaranteed working hours.
Sports Direct’s share price has more than halved in the past year, with shares now changing hands for 272.4p. The retailer’s profit margins have also been hit by the pound’s sharp decline since the Brexit vote.
Sports Direct still owns a large stable of brands including Slazenger, Everlast, Lonsdale and Karrimor.
This article was written by Zoe Wood, for theguardian.com on Tuesday 27th December 2016 12.58 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010