Comment: Why has Mike Ashley's Sports Direct bought a stake in Debenhams?

Sports Direct’s raid on Debenhams to pick up a stake of almost 5% makes tycoon Mike Ashley’s business the fifth-biggest shareholder in the department store business.

Sports Direct has a tradition of stake-building in other retailers and in some instances – Blacks Leisure springs to mind – its interest was unwelcome to incumbent management who saw it as disruptive and distracting.

So it’s notable that when it disclosed its acquisition of Debenhams’ shares, Sports Direct went out of its way to say it is keen to “work together to create value” on behalf of both retailers’ investors. Sports Direct will, it reassured, be a “supportive shareholder”.

The big outstanding question is what Sports Direct’s pounce means. Some think there may be a property opportunity for Sports Direct, but Ashley is probably thinking bigger than that.

Despite Sports Direct’s reputation for piling high and selling cheap in its eponymous shops, the retailer has been spreading its wings and building what it calls a ‘premium lifestyle’ division incorporating brands such as USC, Van Mildert and Republic.

In the first half of the current year, that division generated sales – excluding Republic, which was bought in February last year – up nearly 17% to £65m. That’s small compared with the £900m generated by the core sports stores, but the retailer clearly sees an opportunity.

At the same time, Sports Direct is thought to have considered making an offer for Debs’ rival House of Fraser. Nothing came of the talk but it was indicative of Sports Direct’s broadening sphere of interest.

Ashley and his Sports Direct colleagues are canny operators and the fall in Debenhams’ share price after its New Year’s Eve profit warning has opened up a chance to gain an opening into department stores.

Central to both Debenhams’ and Sports Direct’s businesses are own-brands. Debenhams’ Designers at Debenhams range differentiates it from rivals while Sports Direct, as well as its premium fashion brands, controls brands such as Dunlop and Slazenger.

Perhaps Ashley sees the chance to share brand management expertise across Debenhams and Sports Direct and to introduce some of his labels into the department stores, and to push into the department store market in partnership - or perhaps even in control of - Debenhams.

Whether Sports Direct will end up taking a bigger stake in Debenhams, or even bidding, remains to be seen.

However, as House of Fraser considers an IPO, potential investors in it may wonder what impact Sports Direct’s interest in Debenhams will have.

House of Fraser may be more upmarket than Debs, but the prospect of Mike Ashley influencing or running a department store chain is only likely to intensify competition.