Sports Direct buys 26 per cent stake in struggling retailer Game

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Mike Ashley's Sports Direct (LON:SPD) have agreed to purchase a 25.75 percent stake in Game Digital (LON:GMD).

He has previously orchestrated the acquisition of substantial stakes in Debenhams, French Connection and Findel, the home shopping retailer, through Sports Direct or personal investment vehicles.

Only last month the company had to issue a profit warning, which it blamed on not having enough stock of the Nintendo Switch to sell.

Sports Direct's billionaire owner Mike Ashley. Recently, Ashley was involved in a court case where he described himself as a "power drinker" following non payment of bet to a banker.

Sports Direct itself has come under criticism in recent years for some of its employment practices, including allegations that it paid some of its workers less than minimum wage.

His stake-building in other listed retailers, sometimes through complex financial derivatives‎, has also caused consternation in their boardrooms. Currently GAME shares are trading at 26.5p, having peaked earlier this morning at 28p.

Ashley is the founder of Sports Direct
Ashley is the founder of Sports Direct

The response to this profit warning was another drop in share price value to 20p, which is pretty bleak, considering that when GAME was actually floated on the stock market three years ago it was nearly 200p per share.

The games retailer is also investing in eSports which are increasingly popular across the world.

Will this latest news herald a positive change for GAME?

Game added that it was also focused on cost reduction programmes and "significant efforts to reduce fixed and variable costs across the group's United Kingdom retail footprint, where we have over 220 lease events to manage by the end of 2018".

Sports Direct has yet to comment on the Game Digital stake.

In a statement on the London Stock Exchange, Game Digital said it was pleased that its strategic value has been recognised by Sports Direct.

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