Mike Ashley seals deal to open Sports Direct in Debenhams

Newcastle United owner Mike Ashley (PA)

Billionaire Mike Ashley has finally persuaded Debenhams to launch his Sports Direct brand in its department stores, six months after he controversially bet that the shares would plummet.

The deal, unveiled today, will see Sports Direct take over underperforming space, as Debenhams boss Michael Sharp also revealed that he would be introducing Costa coffee shops into several stores and was in discussions with other retailers, with further announcements due later this year.

“We need to optimise the space in our stores,” Sharp said. “About 10 per cent is less effective. When we asked customers what they wanted many said they wanted a coffee shop, with Costa named several times.”

He refused to say whether Sports Direct had approached Debenhams prior to Ashley’s unconventional approach in January, where he made a complicated bet against the company that led to suggestions he was forcing he way into the boardroom and on to the shop floor.

Sharp said: “Sportswear is less than 1 per cent of our total sales, and since we serve 25 per cent of the population, they are obviously getting their sportswear from somewhere else, so clearly there was a demand for sportswear.”

It comes as like-for-like sales fell 1 per cent in the 15 weeks to 14 June, although Debenhams said this was due to a change in sales times and at the 14-week mark sales were up 0.7 per cent.

Shares in Debenhams — which has suffered a tough time recently, in December issuing its second profit warning in less than a year — dipped 1 per cent to 71.4p.

Sharp also admitted that the retailer had had too many sales, leaving customers confused and uninterested.

He added: “What we’ve always said is promotions are a strength for Debenhams and have been established over a long period of time, but we need to refocus and re-evaluate. Clearly customers like our promotions but we just need to do less of it.”

The company wants to sell more goods at full price and Sharp said he was keen to have more focused sales. Debenhams also launched a £200 million retail bond as it starts to refinance its £650 million debt.

Today’s results are the first full quarter for trading at the refurbished Oxford Street store, which Sharp said was performing better than expected. “Some weeks have blown our socks off,” he said.