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

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.

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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.