Sports Direct is moving upmarket with its investment in USC and Cruise Clothing

Sports Direct is moving upmarket with its investment in USC and Cruise Clothing

UK sporting goods retailer Sports Direct International has bought a majority stake in two fashion firms - West Coast Capital (USC) and Cruise Clothing Ltd (Cruise) - in a deal worth GBP7.0m (US$11.2m).

Sports Direct will step into the premium and luxury market with an 80% shareholding while entrepreneur Tom Hunter, owner of fashion chain USC and independent luxury retailer Cruise,  will retain a 20% stake in both companies.

Sports Direct will provide up to GBP20m to enable the existing management teams to develop the two businesses, which enjoy premium market positions, the company said.

USC currently has 38 stores across the UK, while cruise has 10 stores.

Hunter said the deal will "transform the prospects for both USC and Cruise and our employees".

"We are pleased to be taking this opportunity to work with Tom and his teams in the premium and luxury sector of the market," added Sports Direct chief executive, Dave Forsey. "While USC and Cruise will remain independent of Sports Direct, we will support the businesses with our operational expertise."

The acquisition comes less than three years after reports that USC had gone into administration. The firm was rescued by Hunter through an investment vehicle called Dundonald Holdings Ltd.

USC, which sells brands such as G Star and Diesel, reported a turnover of GBP70.0m in the 12 months to 30 January this year, while Cruise has an annual turnover of around GBP20m.

Seymour Pierce Research analyst Freddie George noted: "This acquisition looks more to do with taking on JD Sports, the leisure sportswear retailer, rather than positioning the Sports Direct business more up-market."