Coast Clothing Uk

Sports Direct acquires stakes in upmarket stores

The FTSE-250 listed sportswear shop has been one of the few winners on the high street so far this year, reporting both increased sales and profits in the nine weeks to 27 March.

In the six months to 30 June, its share price rocketed almost 50% and it's now hovering between 240p and 250p.

Look out for our rundown of the FTSE 350's biggest first-half winners and losers tomorrow. In the meantime, check out our report on AIM's tops and flops for the first six months of 2011 .

In contrast, USC and Cruise Clothing, owned by retail tycoon Sir Tom Hunter, have been struggling to entice consumers to part with their hard-earned cash.

Hunter has been involved with USC since 2004 and purchased Edinburgh-based Cruise in December 2010 after the firm was placed in administration.

At the time he was reported to be in competition with JD Sports  (JD.) which is also said to have been in the running this time round, before being pipped to the post by Sports Direct.

Hunter will retain a 20% shareholding in both USC and Cruise and will keep his position as chairman of both companies.

USC has 38 stores across the UK and its turnover in the 12 months to 30 January was £70 million. Cruise has 10 stores in the UK and an annual turnover of around £20 million.

Sports Direct will provide a facility of up to £20 million to enable the existing management teams to develop the two businesses.

Analyst view...

Initial response to the merger has not been overwhelmingly positive, with analysts questioning the fit of the upmarket brands in Sports Direct's current proposition.

Freddie George, retail analyst at Seymour Pierce, said: "This acquisition looks more to do with taking on JD Sports, rather than positioning the Sports Direct business more upmarket. We have been buyers of the stock, but moved our recommendation to 'hold' following the recent trading update.

"We will review our recommendation again after the final results meeting on 13 July as there is a lot we like about the company. We believe there is more recognition within the company of the value of its brands that can be widely marketed overseas, including Lonsdale, Slazenger, Dunlop and Everlast. Secondly, the company will be a beneficiary of the 'keep fit' trends and forthcoming sporting events - the Olympics and Football Championships in 2012.