Sports Direct has increased its stake in French Connection to 27% after snapping up shares from two of the fashion chain’s activist investors.

Gatemore Capital and OTK, which held 8% and 7% stakes in French Connection respectively, have both sold their entire holdings in the business.

The two firms had previously joined forces in an attempt to drive change at the beleaguered fashion retailer, urging founder and boss Stephen Marks to step down and explore a sale process.

Marks holds a 42% stake in the company, but the swoop on Gatemore and OTK’s shares takes Mike Ashley’s Sports Direct to within touching distance of the 30% shareholding required to trigger a takeover bid.

It comes as Sports Direct continues to build its shareholding in other retailers. Its portfolio includes stakes in Debenhams, House of Fraser and Game.

Five years of losses

French Connection has suffered five consecutive years of losses, which widened from £3.5m to £5.3m last year.

It has also been hit by the departure of Christos Angelides, a former Next director, who quit his non-exec role with French Connection to take over as boss of Reiss.

Gatemore managing partner Liad Meidar told The Telegraph: “French Connection could have unlocked significantly more value during the period had it made more progress in fixing its corporate governance.

“French Connection remains a glaring example of the shortcomings of the UK Corporate Governance Code: namely, that companies can get away with such violations with zero repercussions to the people at the top.”