Can a name change be good for the Sports Direct share price?

Will Sports Direct’s name change to Frasers help it reinvent itself with an upscale image that could benefit investors?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

A rose by any other name may still smell as sweet, but will a discount sporting goods store really be able to change its image through a new moniker? This is seemingly what Mike Ashley intends for Sports Direct (LSE: SPD), which it announced this week will be renamed Frasers next month.

The move comes as part of an attempt to rebrand the bargain basement image of the sports retailer and reflect the evolving brands in the business, but it does raise two questions for me – will it work, and do we want it to?

Half measures

A name change and rebranding of a business, especially a popular, everyday store operator as well known as Sports Direct, is always a big deal. It is perhaps no surprise then that this name change will not affect the stores.

Sports Direct said that though its public limited company will change its name, its 450 UK stores as well as its 253 European branches will all still keep the name Sports Direct, as well as the recognisable red and blue branding.

While most of us would notice a name change at our favourite shop, the average person doesn’t care about the official name of a plc. It also seems somewhat ironic that this name change is an obvious move towards the House of Fraser brand – the 2018 takeover of which caused controversy and financial problems. But with an upscale Frasers chain reportedly at the planning stage, there does seem some logic there.

Low-end, high-end

This high-level name change is what Mr Ashley intends to be a rebranding not of its Sports Direct stores, but rather of the company image. It comes due to that expansion for the firm into higher-end retail.

As well as the takeover of House of Fraser itself, and the expected higher-end Frasers chain, Sports Direct also own 50 luxury fashion stores under the Flannels brand, plus the USC fashion chain.

The company stated its intension clearly in its name change announcement, which was part of its official notice of its AGM: “[This name change] is reflective of the business strategy of the company to elevate its retail proposition across all channels”

But should it want to? Mike Ashley has certainly been a controversial figure, and the Sports Direct brand has seen some PR damage through talk of bad working conditions and poor pay, but still people know what they will get when they go there – decent quality, branded sports equipment or clothing, at a cheap price.

With the higher-end market however, the kind of controversy often garnered by Mr Ashley may just not go down so well. There is always a reasonable argument in business that you should stick to what you know, and stick to what you are good at. Mr Ashley and Sports Direct know and are good at bargain basement sporting goods.

The name change itself will mean little, but the move into the higher-end market could prove to be either a disaster, or the start of something wonderful. I think it may eventually be good for the Sports Direct share price, but for now I want to wait and see.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Karl has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

The flag of the United States of America flying in front of the Capitol building
Investing Articles

2 UK shares that could rise if Trump wins the Presidential election

These UK shares are among the FTSE 100's most popular stocks. And they could rise in value if Donald Trump…

Read more »

Closeup ruffled American flag representing US stocks and shares
Investing Articles

2 UK stocks that could rise if Harris wins the Presidential election

Royston Wild believes these UK stocks could receive a bump if Kalama Harris wins the Presidency, giving their share prices…

Read more »

Investing Articles

After a 96% plunge, is buying more Aston Martin shares throwing good money after bad?

Just two weeks after buying Aston Martin shares Harvey Jones found himself nursing a painful loss. Yet after recent news…

Read more »

Investing Articles

After crashing 45% in October, should I buy this FTSE 250 share for my Stocks and Shares ISA?

Roland Head explains why he’s tempted to add this risky FTSE 250 turnaround share to his Stocks and Shares ISA…

Read more »

Investing Articles

Could I use a stock market crash to turn £20k into half a mil in just over a decade?

A stock market crash might sound terrifying to some but it can also present a once-in-a-lifetime opportunity to accumulate generational…

Read more »

Investing Articles

Recently released: October’s small-cap stock recommendation [PREMIUM PICKS]

We believe the UK small-cap market offers a myriad of opportunities across a wide range of different businesses and industries.

Read more »

Investing Articles

Here’s how a Stocks and Shares ISA and Lifetime ISA could supercharge my wealth!

Individual Savings Accounts (ISAs) can help UK share investors take their earnings to the next level. And their importance is…

Read more »

A person holding onto a fan of twenty pound notes
Investing Articles

A high-yield dividend ETF and an investment trust to consider this November!

Investors wanting to boost their passive income could benefit from investigating these high-yield funds and trusts, says Royston Wild.

Read more »