James Moore: Mike Ashley’s Sports Direct buys 4.8% stake in Australian fashion discounter MySale
Outlook A fat finger, a tumbling share price, then a fat stake taken out by a company whose founder is apparently not unfond of of the pies they sell at halftime at his football club.
Yes, Australian fashion discounter MySale has packed more news into its first few weeks as a quoted company than many more established businesses manage in months, if not years.
To explain: while grappling with the aftermath of its shares mistakenly being priced in pounds rather than pence when it floated in London - traders misread £2.26 as 2.26p causing a rush of automatic sell orders - Mike Ashley’s Sports Direct swooped in to buy a 4.8 per cent stake.
To add even more spice, the move saw Mr Ashley sort of partnering with Sir Philip Green because the retail mega-mogul’s wife Tina owns just over 20 per cent of MySale through an offshore investment vehicle.
But that isn’t what this was all about. Mr Ashley quite probably wanted a gateway into Australia, and he wanted MySale to provide him with it.
The apparent tactic of taking a sizeable minority stake in another businesses as a means of forcing the target to the table to talk business is one Sports Direct has used before.
You’d think that a better way of going about it would be served by just picking up the phone. But it seems to be getting Mr Ashley and the company he controls what they want. A similar assault on Debenhams shares eventually resulted in the department store offering Sports Direct concessions in its outlets.
The MySale purchase has yielded an even bigger prize, because MySale has agreed to provide Sports Direct’s Antipodean gateway by way of a joint venture between the two.
At first you might wonder why the latter doesn’t simply go it alone. After all, it’s now in 19 European countries. Moreover, sportswear prices in Australia suggest that the time is right for a discounter to undercut them.
Take replica Wallaby rugby tops. You’ll pay A$160 for one of them, nearly £90 in Sterling. An equivalent England shirt will set you back £55. The same goes for cricket where an Australia 20/20 jersey will cost you A$120, or £66, compared to an England Jersey at £37.
A strong Aussie dollar doesn’t explain that because it’s weakened recently against Sterling. Say G’day to Sports Direct and the chances are they’ll soon be a lot cheaper.
But why bother taking the time and money to do something yourself if you can get it done cheaper with the help of a partner like MySale, which has nearly 12 million customers that it’s willing to let you get your hands on?
It’s true that MySale will reap some of the benefits if Mr Ashley’s operation takes off over there like it has over here, and in large parts of Europe.
All the same, the big winner here isn’t wearing a Wallaby top. It’s wearing the black and white of Newcastle United.
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