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September 27, 2022

Experts rule rumoured brand divestment by JD Sports sensible

A rumoured decision to offload lagging brands would be a “good move” for JD Sports, industry experts have told Just Style.

By Hannah Abdulla

According to press reports, JD Sports is in talks to offload a number of brands within its fashion and beauty portfolio as it looks to focus on its core offering.

Speaking to Just Style, Pippa Stephens, apparel analyst at GlobalData said: “The brands that JD Sports is rumoured to be offloading, including The Couture Club and Hairburst, are currently only a very small proportion of its overall sales, so cutting ties with them will have little impact on its future performance.

“However, with the sportswear market still booming following the pandemic and other parts of the retail market now struggling due to surging inflation rates and reduced consumer confidence, it makes sense for JD Sports to focus on developing the key aspects of its core proposition, rather than these smaller brands, to ensure it continues to thrive.”

JD Sports declined to comment on market speculation.

Last week JD Sports issued a warning for the second half of the year after recording a decline in earnings for the 26 weeks ended 30 July.

In its first-half results, pre-tax profits amounted to GBP298.3m (US$337m), down from GBP364.6m a year earlier.

The retailer said trade in the UK, principally online, softened in August and early September. Pre-tax profits in the UK and the Republic of Ireland were down to GBP153m from GBP174.2m. There was a return to profit in the sports fashion retail fascias in Europe, which contributed to a profit of GBP57.1m from a loss of GBP7.2m a year earlier.

The sportswear retailer had earlier been plagued with issues surrounding its attempted acquisition of Footasylum which had been blocked by the UK Competition and Markets Authority which believed the deal could be bad for shoppers as it may result in higher prices, fewer choices in stores or a reduction in service quality.

In its Phase Two findings, it said the merger could result in a “substantial lessening of competition” in the retail supply of sports-inspired casual footwear and of sports-inspired casual apparel – both in-store and online – to consumers in the UK, findings which JD Sports said were fundamentally flawed. 

JD closed a deal in August to sell the Footasylum brand to Aurelius.

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