The original deal between Frasers Group and JD Sports included the purchase of six fashion brands for GBP47.5m (US$57.7m), however the announcement on the London Stock Exchange today (8 February) reveals Rascal Clothing Limited (‘Rascal’) has been withdrawn from the transaction.
Despite the removal of one brand from the list, GlobalData apparel analyst Pippa Stephens tells Just Style that with the retail market struggling due to surging inflation rates and reduced consumer confidence, JD Sports will benefit from being able to focus on developing the key aspects of its core proposition, rather than these smaller brands, to ensure it continues to thrive.
She also points out that the brands JD Sports has offloaded to Frasers Group were only a small proportion of its overall sales, so cutting ties with them will have little impact on its future performance.
The London Stock Exchange update confirms all the terms of the transaction remain as outlined in the announcement made on 16 December 2022.
It states: “JD Sports Fashion Plc (‘Group’) announces that it has formally completed the divestment of the businesses which trade as Tessuti (inc Xile), Scotts, Choice, Giulio and Cricket to Frasers Group Plc (‘Frasers’).”
In the original announcement, JD Sports said the deal followed a “strategic review led by the group’s CEO [aimed at] significantly simplifying its branded fashion offer through the divestment of 15 UK-based non-core fashion businesses.
“The divestment of these businesses will allow the group to focus more fully on the opportunities across the rest of the group, in particular the international and digital expansion of the group’s core premium sports fashion fascias,” the statement read.
This divestment will result in the group recognising a non-cash exceptional charge in its annual accounts for the period to 28 January 2023 of approximately GBP100m.
Régis Schultz, CEO of JD, said: “JD is rightly recognised for its laser focus on the customer and we are convinced that the most significant opportunities lie in the continued international development of the group’s global sports fashion businesses.
“We are pleased to have agreed the sale of these attractive, but non-core, brands and I would like to express my sincere thanks to all colleagues at the businesses which form part of the transaction for their hard work and contribution to the group over the years.”
In October, JD Sports announced that holding company Iberian Sports Retail Group had upped its stake in Spain’s Deporvillage by 18%. JD Sports Fashion Plc acquired a majority stake in Deporvillage in June last year in a deal worth around EUR140m ($167m).
And in September, NIKE Inc partnered with JD Sports on a members-only rewards programme, despite its increased focus on its Direct to Consumer (DTC) strategy.