Sports Direct’s recent £31m deal for luxury lingerie brand, Agent Provocateur has recently sparked controversy and anger in the high end fashion business.
Billionaire Mike Ashley, owner of Newcastle United F.C. and Sports Direct, reportedly paid up to £30 million through Four Marketing, which had previous experience dealing with the entrepreneur’s up market fashion brands. Conducted through a ‘pre-pack administration deal’, it resulted in anger and disappointment from the co-founder of Agent Provocateur, Joe Corré, son of British Designer Dame Vivienne Westwood and Malcom McLaren, manager of the Sex Pistols. For those out there who aren’t so business savvy, pre-pack administration is like a bankruptcy procedure where a company, after declaring insolvency, agrees to sell all assets without the consultation of its creditors if sale options have been exhausted. The business is then officially put into administration and lo and behold, the company is snapped up by various buyers. Therefore, easy bait!
Agent Provocateur was founded in 1994 on Soho’s Broadwick street, an area renowned for prostitution and sex shops. In an era when people were still prudish towards sex, Joe Corré established a brand that successfully yet controversially ‘stimulated, enchanted and aroused’ its wearers. However in the recent years, the brand struggled with debts and accounting issues. According to Corré, he holds private equity group 3i, responsible for the deal. He describes the company as being negligent and incompetent, despite the fact that they originally bought majority stake in Agent Provocateur for £60 million in 2007. The co-founder claimed they intentionally allowed the business to crumble and used the sub-standard process of pre-pack administration to get rid of debt obligations. However, 3i countered that the company had little control in the transaction process nor the choice of buyer.
An angered Corré stated to The Guardian, the sale to Mike Ashley was a “A disgrace to British business,… a preposterous deal that is going to leave 3i’s reputation in tatters. This is a phenomenal stitch up. What’s next, Agent Provocateur tracksuits?”
Corré further blames 3i along with Alix partners for purposely rejecting a more favourable sale offer from Quadro capital, which had offered £35m and a further £30m to invest and prevent Agent Provocateur’s issues of insolvency. This included the protection of jobs and creditors. So far, Agent Provocateur employs at least 600 people in the UK. Their fate however, is left unknown. Corré also expresses concern for employees working in Agent Provocateur’s international outlets. The pre-pack deal did not include buying the 100 stores outside of the UK.
Although Sports Direct distributes luxury brands besides sportswear, such as Orla Kiely and 7 For All Mankind jeans, the fashion world remains skeptical how two high street brands, catering to different audiences could ultimately fit and work together.
To Mike Ashley, the deal marks his latest “‘pile it high and sell it cheap model’ as he aims to make Sports Direct, ‘the Selfridges of retail'”.
Doing so, the billionaire strives to turn his Sports Direct empire into the high end fashion market he envisions. So far, Mike Ashley has landed deals with several retail rivals such as French Connection, House of Fraser and Debenhams. He hopes to attract more popular sports brands such as Adidas and Nike. Mr. Ashley’s controversial move to buy a luxury lingerie business of all things, was, like the rest of his unusual business endeavours, a safe guard to keep Sports Direct a pinnacle for high end fashion.
According to Mike Ashley, Agent Provocateur will run alongside Sports Direct as a separate branch. Whether things will run smoothly in the future, is a different matter. Good luck and best wishes to the Agent Provocateur team!
Check out FIB’s 5 min web-doco on Agent Provocateur below!