DW Sports: Mike Ashley’s Frasers Group promises to save jobs after £37m takeover

DW Sports had said 1,700 jobs were at risk of being axed after it went into administration earlier this month

(PA)

Billionaire businessman Mike Ashley has agreed a £37m deal with DW Sports Fitness to buy the latter’s leisure clubs and retail outlets after it fell into administration.

Mr Ashley’s Frasers Group, which owns Sports Direct, Evans Cycles, Lillywhites and House of Fraser, said it would pay £37m for parts of the assets of DW’s gym and fitness business, as well as some of the company’s stock, but not the brand name or intellectual property.

Frasers Group said in a statement that the deal would save “a number of jobs” but did not specify how many. Around 1,700 jobs were at risk of being axed when DW Sports Fitness fell into administration early this month.

“The transaction complements the existing gym and fitness club portfolio within the company’s group and is consistent with the group’s elevation strategy,” said Frasers Group.

“Frasers Group looks forward to elevating the gym and fitness assets acquired pursuant to the transaction under the group’s existing iconic Everlast brand, and is also pleased to have saved a number of jobs.”

DW Sports Fitness, which ran 73 gyms and 75 retail sites in the UK, appointed insolvency specialists on 3 August after the coronavirus pandemic hit its business, forcing it to close all its operations. During the year ending 31 March 2019, it made a loss of over £20m.

DW had planned earlier this month to wind down its retail business for good. The firm also owns the Fitness First gym chain, which has not been affected by the administration.

Susannah Streeter, senior market analyst at Hargreaves Lansdown, told the BBC it was a surprise that Frasers Group had bought a gym business while the public remains reluctant to exercise indoors as the virus continues to infect people.

“It’s likely to be some time before people bound back to the gym in greater numbers and it can be ascertained whether this latest acquisition will have been the right choice for the company,” she said.

DW Sports’ owner, Dave Whelan, has had a long-running rivalry with Mr Ashley spanning the past two decades, after Mr Whelan reportedly told him: “There is a club in the north, son, and you’re not part of it.”

Later, Mr Ashley reported Mr Whelan’s JJB Sports business to the Office of Fair Trading (OFT) over allegations of price-fixing. The OFT then issued fines of millions of pounds to those involved, including JJB Sports.

The pandemic has also hit Frasers Group, which said its most recent financial year had been “the most challenging” in its history.

In the year to 26 April, profits slid by 20 per cent to £143.5m as the lockdown forced stores to close. Mr Ashley warned last week that more House of Fraser outlets could close next year.