Mike Ashley's Sports Direct buys 26% stake in Game Digital

Mike Ashley already owns stakes in Debenhams, French Connection and Findel

Mike Ashley's Sports Direct has bought a quarter stake in struggling computer games retailer Game Digital, adding to his list of High Street holdings.

Game said Sports Direct had bought 44 million shares, a 25.75% stake, adding that it looked forward to "working collaboratively" with the company.

Last month, Game issued a profit warning, blaming poor supplies of the Nintendo Switch console.

Mr Ashley has stakes in Debenhams, French Connection and Findel.

Findel is a mulit-category online retailer.

The Newcastle United owner has recently been involved in a colourful court case with an investment banker and last year was criticised for the running of a Sports Direct warehouse in Derbyshire.

In a statement Game said: "Game is aware that Sports Direct has taken significant strategic equity stakes in a number of retail and brand businesses across both the UK and USA, and is a leading retailer which partners with major global brands and suppliers.

"The group looks forward to working collaboratively with Sports Direct to explore the clear opportunities that a constructive partnership and collaboration can deliver for all stakeholders in the gaming, live events and rapidly growing e-sports markets in which it operates."

Scathing view

Adam Tomlinson, analyst at Liberum, said: "We see a number of reasons how Game and Sports Direct can gain from a closer working relationship but it is surely the similar customer demographics that must be the key draw card here.

Mr Tomlinson added that the Insomnia Festivals run by Game, attract thousands of enthusiasts and could also present a merchandising opportunity for Sports Direct.

He said there had been a rapid growth in e-sports with around 6.5 million participants in the UK.

Nick Bubb, retail analyst was more scathing in his assessment and does not believe the purchase indicates a particular strategy: "Well, the best that can be said about the latest bizarre investment by Sports Direct is that the stake in Game Digital only cost the company about £10m, such is the low level to which the Game share price has sunk.

"How much Mike Ashley knows about the esports market remains to be seen," he added.

Shares in Game Digital jumped 15% on news of Sports Direct's purchase ,before shedding most of that to end up 3%.