Sports Direct is to pay £108m for a refurbished property on Oxford Street to become the first London branch of its upmarket Flannels chain, in a deal done by the boyfriend of founder Mike Ashley’s daughter.
The sports retailer has agreed to buy the freehold of Academy House on the corner of Oxford Street and Soho’s Poland Street. It will open a flagship 20,000 sq ft Flannels store and use the floors above for its new London office.
The deal was overseen by Michael Murray, the boyfriend of Ashley’s eldest daughter, Anna. Murray was put in charge of the retailer’s property empire last year and could potentially earn millions of pounds in bonuses.
Murray’s appointment raised questions about Ashley’s dominance of the company because Murray had little experience of the commercial property world. Murray can earn up to 25% of the value his deals create – though Sports Direct has declined to clarify how the value is measured.
The company sold its former London office in New Cavendish Street for £44m to the University of Westminster last year before Murray’s appointment. It has been looking for a high-profile London site since.
A Sports Direct spokesman said Academy House met all Sports Direct’s strategic requirements and the purchase repaid the faith the company had placed in Murray, who lives with Ashley’s daughter, in a London house he bought for £10.75m with a loan from Ashley.
Academy House is on the tattier eastern side of Oxford Street with more prestigious Selfridges, John Lewis and Bond Street to the west. But the area to the east of Oxford Circus is being redeveloped along with the £1bn rebuilding of Tottenham Court Road station for London’s giant Crossrail transport project.
Sports Direct bought a 51% stake in Flannels in 2012 to add to its non-sports “premium lifestyle” division, which also includes the USC and Cruise chains. The company is expanding Flannels as trading at its core Sports Direct stores suffers.
The chain, which sells brands such as Dolce & Gabbana and Moschino, was founded by Neil Prosser in Knutsford, Cheshire, in 1976 and claims to have introduced major designers to the north west. Prosser retained a 49% stake in the business, which was loss-making at the time Sports Direct took control.
Flannels’ most recent accounts, for the year to April 2015, showed the business swinging to a £1.7m pre-tax profit from a £1.6m loss helped by increased revenue and cost savings from moving admin functions to Sports Direct’s head office.
