Sports Direct International PLC has acquired an 18.9 percent stake in Findel PLC, owner of Kitbag, a money losing seller of replica soccer kits and other sports merchandise that also manages retail operations for major soccer clubs.
Sports Direct, which is the largest sporting goods retailer in the United Kingdom and is growing rapidly through acquisitions across Europe, revealed its stake Tuesday in a regulatory filing. Findel subsequently announced it had reached an agreement to sell Kitbag to an unidentified third party, according to British media reports.
Findel pulled Kitbag off the market in May after an eight month strategic review of the business after concluding it was in shareholders' best interests to continue developing the business.
“Kitbag has delivered a substantial recovery in its underlying operations and contract base after the renegotiation of legacy contracts, and has started to capitalise on the significant international growth opportunities open to the business,” Findel said at the time. ” As part of Findel we are confident that Kitbag will continue to build on the recovery to date.”
Kitbag operates through its own online platform Kitbag.com, and also manages officially-licensed club or sports organization retail outlets, including online, physical stores and event-retail on a white-label basis. Its partners are a wide range of leading names in sports, including Real Madrid, Manchester United, Chelsea and Manchester City in the world of football, in addition to other sports organizations such as the Wimbledon Championship, the Tour de France, McLaren, the Ryder Cup, F1, the NBA and the NFL. It's largest vendors are Adidas and Nike.
Kitbag generated an operating loss of £1.2 million in the fiscal year ended March 27, down from £4.1m in the prior year driven largely by a combination of top-line growth and a further reduction in the effective royalty rate of 50bp resulting from the successful renegotiation of unprofitable contracts, and the launch of new contracts on a more sustainable operating model. Kitbag sales reached £74.5 million during the fiscal year, up 11.7 percent from a year earlier. Gross margin for the year improved 230 basis points to 44.3 percent.
Findel also owns the profitable direct-to-consumer business Express Gifts Ltd. and an Educational Supplies division that supplies a majority of UK schools.
