Frasers Group buys JD Sports' premium fashion portfolio
In shock news on Friday afternoon, ever-acquisitive Frasers Group announced that it had bought a basket of premium fashion brands from its big rival, JD Sports Fashion.
In a stock exchange statement, Frasers said it has acquired “JD's interests in” Base Childrenswear, Choice, Clothingsites (including Brown Bag Clothing), Cricket, Giulio, Kids Cavern, Missy Empire, Nicholas Deakins, Pretty Green, Prevu Studio, Rascal Clothing, Tessuti (including Xile), Scotts, Watch Shop and Topgrade Sportswear (including Get The Label).
The deal sees Frasers acquiring the shares held by JD and taking on “all of the indebtedness owing to JD by the businesses”. This adds up to a value of £47.5 million and is being funded from Frasers Group's existing cash resources.
The purchase of eight of the businesses has already completed and the remaining seven will complete early next year.
So why did JD sell? In its own statement on Friday it said that the decision follows a strategic review led by the group's CEO that sees it “significantly simplifying its branded fashion offer through the divestment”. It added that the businesses are “non-core”.
This will allow it “to focus more fully on the opportunities across the rest of the group, in particular the international and digital expansion of the core premium sports fashion fascias”.
It will mean the company recognising a non-cash exceptional charge in its annual accounts for the period to 28 January 2023 of approximately £100 million.
Its CEO Régis Schultz 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.”
The deal is particularly interesting as it shows how the two retail giants have diverged in recent years.
They were best known as the two biggest names in sports-linked retail on the British high street. Frasers’ Sports Direct business is still that firm’s biggest chain. But the company changing its name from Sports Direct to Frasers, acquiring more pure fashion businesses (both outright and via minority stake purchases), and the money it has invested in operations such as luxury chain Flannels, show where its ambitions lie.
JD Sports meanwhile, has also been a serial acquirer but its purchases tend to be more sports-focused (Cosmos Sport, Deporvillage, Finish Line, Shoe Palace, DTLR and more) and this divestment underlines this.
The changes at the two firms also include CEOs. The days when Sports Direct’s Mike Ashley and JD’s Peter Cowgill were bitter rivals seems a long time ago now that Michael Murray is at the helm of Frasers and Schultz at JD.
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