Sports Division float threatened by retail gloom

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The Independent Online
SPORTS DIVISION, the sports retailer, is considering postponing its pounds 350m flotation because of the recent slowdown in sales on the high street. There is a crunch meeting later this week between the company and its advisers where they will decide how best to proceed.

Some analysts said it looked increasingly unlikely the fast-growing group would come to the market in April or May as originally planned. This timing had been seen as auspicious with the World Cup coming up in June.

Any postponement would be a significant blow not just for the company but the whole sports goods sector, which has enjoyed a huge boom on the back of the rising popularity of brands like Adidas, Reebok and Nike.

But it is thought that sales have been slower since Christmas and the whole retail sector has been suffering from the impact of higher interest rates. Sports Division's shops have been holding big clearance sales, indicating that they have been struggling to shift unsold stock.

John Richards, at the company's broker NatWest Securities, said the timing of the float had never been stated, but said: "We will go when the market conditions are right. The timetable is not set in stone."

The company would not comment on the possibility of its float being pulled. However, a spokesman added: "Sports Division does not have an absolute requirement to float because the company can comfortably fund its aggressive expansion programme through cashflow. It can pick its moment as to when it floats."

Nick Bubb, retail analyst at SG Securities said: "If demand is slackening which may be due to changing fashion trends or the wider economic backdrop, and the supply is increasing because of the aggressive expansion plans of these companies, then that is bound to affect profitability.

"These companies sell the same stuff at the same prices and there is not a lot to distinguish one from other. The market has been uneasy for some time about the amount of new space they are adding and demand has cooled since Christmas. That is not a happy background for a big float like Sports Division."

Sports Division has more than 250 stores and was transformed by the purchase of the Olympus Sports shops from Sears in 1995. Philip Green, the former Amber Day chairman, brokered that deal and now has a 13 per cent stake in Sports Division as a result.

It is understood that when the company floats Mr Green has given an undertaking to sell his entire holding. It is possible that if the company decides to delay its float, Mr Green's stake may be acquired by the company or by institutions

Sports Division, led by the chief executive Tom Hunter, has been battling with rival sports retailers such as JJB Sports, John David Sports, All Sport and First Sport, which is part of Blacks Leisure.

It is expected to record sales of pounds 310m this year. Its financial adviser is SBC Warburg Dillon Read with NatWest Securities acting as stockbroker.