Sports Direct Plc To change the image on this slide, select the picture and delete it. Then click the Pictures icon in the placeholder to insert your own image.

Business model

Storefront/instore strategy Displays high-end brands at the front of the store Displays high margins proprietary secondary brands at the back of the store Slazenger, Everlast, Lonsdale, Karrimor Targets lower end of market 468 UK stores/289 overseas stores

The internet is killing bricks and mortar retailers

Internet + bricks and mortar best proposition Best online retailers have bricks and mortar stores Some consumers want to hold and feel sporting goods before purchasing Sports Direct has shorter leases

Too reliant on big name sports brands eg. Nike, Adidas

Sports Direct creates value for sporting brands Sells off excess inventory Property purchase scheme will help store profile “Selfridges of Sport” layout in larger stores Bosses hates sales decreases

JD Sports is a better retailer than Sports Direct

Sports Direct complements JD Sports JD Sports: small stores with high footfall (and rents) JD Sports: new and exclusive ranges

But Mike Ashley is a ******!

Mike Ashley is a successful founder CEO with skin in the game Started the chain in the 1980s Excellent overall record of acquisitions, share repurchases, investments in retailers Owns 58% of shares outstanding Inspires loyalty amongst many of his top managers

International expansion

International expansion has been hitherto unsuccessful and this appears unchanging Latest investment appears characteristic Mike Ashley - assets of $101 million at a discount to book value of $126 million Since 2007 £212 million invested in overseas expansion Resulted in £97 million loss

Valuation

Sports Direct is cheap Sports Direct is available for 404p stock price x 540m shares outstanding = £2.17 billion Last year’s profits are £134 million (2016 = £245 million) A buyer is paying 7.5 times an already-depressed EV/EBITDA