JD Sports Fashion, a leading sportswear retailer in Britain, is expanding its reach across the United States through an acquisition of American athletic fashion retailer Hibbett Inc. The deal, announced on May 17th, 2021, is expected to boost the company’s presence in the U.S. market amid challenging times for athletic clothing retailers globally.
The proposed deal involves JD Sports paying $87.50 per share in cash for Hibbett, a premium of about 20%. This acquisition will provide JD Sports with a significant footprint in the country and complement its existing brands like Shoe Palace and DTLR, expanding its reach from coast to coast.
Hibbett Inc operates approximately 1,169 stores across 36 U.S. states, providing JD Sports with a valuable addition to its portfolio. The acquisition will increase JD Sports’ revenues in North America and enhance its earnings in the first full year of ownership, with cost savings projected to be at least $25 million.
To finance the acquisition and refinance Hibbett’s existing debt, JD Sports plans to utilize its U.S. cash resources and extend its existing bank facilities. Despite challenges in the retail industry, JD Sports remains confident in its strategic growth plan and the potential of the U.S. market.
In London on May 17th, 2021, people gathered outside a JD Sports shop as they adjusted to reopening under Stage Three of England’s reopening plan.
Recent weak outlooks from sports apparel giants like Nike and Puma have put pressure on companies in the industry worldwide.
Despite this pressure on global athletic clothing retailers, JD Sports remains optimistic about future demand for sports apparel.
New styles of sneakers and track suits are anticipated to revive the market as events like the Euro soccer championships and Paris Olympics are expected to boost demand for sports apparel.
JD Sports expects events like these to drive demand for sports apparel as they continue their expansion into North America through their acquisition of Hibbett Inc.
