JD Sports sells 15 fashion brands to Mike Ashley’s Frasers Group in $58m deal

Frasers Group, owner of the Sports Direct chain founded by billionaire Mike Ashley, has agreed to buy a series of fashion brands from leisurewear retailer JD Sports Fashion for “up to” £47.5 million ( $57.7 million) which covers the acquisition of shares in the labels and their debt.

The move, announced late Friday afternoon just before the market closed, leaves JD Sports free to continue expanding into its core sports retail segment while Frasers Group landed a choice of premium brands in addition to an already growing portfolio. It covers the high end, from fashion retailer Flannels; the Saville Row fashion house Gieves and Hawkes; and international label Hugo Boss, of which Frasers has a 34% stake, Jack Wills, department store House of Fraser, and Sofa.com.

This latest deal saw eight of the companies – Base Childrenswear, Clothingsites (including Brown Bag Clothing), Kids Cavern, Missy Empire, Nicholas Deakins, Pretty Green, Prevu Studio and Watch Shop – transfer ownership on Friday. Completion of the other seven – Choice, Cricket, Giulio, Rascal Clothing, Tessuti (including Xile), Scotts and Topgrade Sportswear (including Get The Label) – is scheduled for early 2023.

The Frasers Group said the acquisition would be funded from “existing cash resources” and, based on the most recently filed individual annual accounts, the companies had total gross assets of around £239 million and a pre-tax profit of £5.3 million.

JD Sports’ decision to sell follows a strategic review led by CEO Régis Schultz whose objective is the international and digital expansion of the group’s high-end sports fashion fascias such as JD, Size?, Shoe Palace, acquired during the pandemic, and Tessuti.

In a statement, the newly appointed CEO said: “We believe that the most significant opportunities lie in the continued international development of the group’s global sports fashion business.” This means a greater focus on JD fascia which is increasingly exposed in the US market. The brand now has more than 100 stores in the United States compared to 66 in 2021, including a second country flagship on State Street in Chicago which opened in October.

A move upmarket

Under Michael Murray’s leadership, Frasers Group doubled down on its uplift strategy which led to divestments of, for example, Bob’s Stores and Eastern Mountain Sports for $70 million. This has enabled a greater focus on the group’s high-end lifestyle division and the opening of flagship stores such as new Flannels stores, including a flagship in Liverpool in June, where the focus is on the in-store experience and digital.

The CEO, appointed on May 1, is currently presiding over a recovery with the best growth coming from the premium lifestyle division. Frasers Group’s interim results, released on December 8 for the half-year to October 23, showed the unit rose 25% to £534m, ahead of the unit’s 12% growth. much larger UK sports retail at £1.53billion. The strong growth was largely due to the openings of new Flannels stores.

While controversy hung over Mike Ashley, the majority shareholder of Frasers Group, he was credited with his achievement in transforming a single sports store in Maidenhead, near London, in 1982 into a global empire of 1,500 stores today.

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