A billion-dollar deal announced today by JD Sports will transform the FTSE 100 sportswear retailer’s run into US markets, and reversed the direction for recent major international merger news, with a UK buyer.
The Manchester-based firm is snapping up Hibbett for £878 million, or just over $1 billion.
The deal is expected to increase JD’s earnings straight away. Combined sales in the US from the two companies will amount to around £5 billion, upping the share of JD's sales that come from the country to 40% from 32%.
Hibbett is based in Birmingham, Alabama, the 75-year-old company has over 1,000 stores in 36 states under its own name and the City Gear brand.
Régis Schultz, JD’s chief executive, said: “Hibbett's footprint is highly complementary, adding a stronger presence in communities across the southeastern US, where we currently have a limited presence. It will also provide a stronger platform for the rollout of the JD fascia in the US.”
JD will fund the deal through existing resources of $300 million and a $1 billion extension to its “existing bank facilities”.
Shares rose almost 9p to 127p, a rise of over 7%, the second-biggest rise of the day on the FTSE 100.
The company called the deal a “strategic milestone”.
JD Sports was founded in 1981 by entrepreneurs John Wardle and David Makin in a shop in Bury. It now has a global presence, including the Shoe Palace brand in the West Coast region of the US and Livestock in Canada. It also owns Portugal’s Sport Zone and Sizeer in central and Eastern Europe.
Schultz, who has a three-decade career in retail, has previously held senior roles at Castorama and Pernod Ricard in France and Kingfisher in the UK, the owner of B&Q, also said today that the Hibbett deal “accelerates our growth plans within the US”, adding:
“It will also strengthen further our key brand partner relationships in the largest sportswear market in the world. Hibbett has a strong and experienced management team who we look forward to working with on this transaction and beyond as we welcome Hibbett into our family of North American retail fascias."
The French executive has led an aggressive expansion in the US having taken over as CEO from the long-serving Peter Cowgill in May 2022. JD was told to sell the Footasylum chain by competition regulators in 2022.
It issued a profit warning in January, citing “more cautious consumer spending” and “increased promotional activity”.
But with investors backed today’s news, sending JD’s shares higher, City experts were also sounding positive on the move, and Schultz’s transatlantic ambitions.
Russ Mould, investment director at broker AJ Bell, said: “UK retailers haven’t always fared too well in the States but JD’s 2018 acquisition of Finish Line has proved a rare success story as the company leveraged the experience of the latter’s US management and built on this success with a further deal for Shoe Palace a few year later.
“This latest deal is for an established brand which dates back to the 1940s and has good relationships with other leading sportswear brands as well as operating from prime locations.”
