LONDON — Mike Ashley’s Sports Direct International, the U.K. clothing and sporting goods retailer, has taken an 11 percent stake in the ailing high-street label French Connection, whose founder-owner Stephen Marks is coming under increasing pressure from the company’s institutional investors.
The once-flourishing retailer has been posting losses for the past five years, and its shares have fallen in value by 57 percent since May 2014. Marks has a 42 percent stake in the publicly quoted company, and shareholders want him to give up his joint roles as chairman and chief executive officer. They accuse him of neglecting the company and eroding its value.
Management isn’t the only problem: The British high street is in crisis, with retailers struggling to compete with the big international fast-fashion chains such as Zara and H&M, and to survive in a culture of discounting, too many brick-and-mortar stores and rising rents.
French Connection welcomed the news of the investment: “We note that Sports Direct has taken long-term significant stakes in a number of British retailers in recent years,” a spokesman for French Connection said, “and see this investment as a vote of confidence in the true potential of our company. We look forward to working with them more in the future.”
Earlier this year, Sports Direct acquired an indirect economic interest in 4.3 million Iconix shares, or 9 percent of the company. Sports Direct also holds stakes in Findel and Debenhams. Ashley, owner of the Newcastle United Football Club, has also invested in the flash sales site MySale Group.
Launched in 1982, Sports Direct operates 661 stores and sells products under its own brands, such as Dunlop, Slazenger and Everlast, as well as Adidas, Nike, Reebok, Under Armour and Puma.
On Thursday, shares in French Connection closed down 5 percent at 0.38 pounds, or $0.48, while Sports Direct closed up 1.2 percent at 3.02 pounds, or $3.81.