Sports and fashion brands retailer JD Sports (JD.) has snapped up out of town retailer Go Outdoors for £112.3m in a highly complementary deal.
The takeover dramatically boosts the size of JD's outdoor products division, where losses in existing businesses Blacks, Millets, Ultimate Outdoors and Tiso were reduced significantly in the six months to 30 July.
Retail star turn JD Sports has shelled out £112.3m and assumed £16m in net debt to get its hands on walking boots, waterproof jackets, rucksacks and tents purveyor Go Outdoors, formed in 1998 by Paul Caplan and John Graham.
It has bought Go Outdoors from YFM Equity Partners and 3i (III) in a deal that sees Caplan and Graham leave the business. Go Outdoors has grown at an impressive clip, morphing from a single store into an omnichannel specialist with 58 outlets, the bulk located in out of town retail parks.
The latter point is key, as Peter Cowgill, JD Sports' executive chairman (pictured below), explains: 'Go Outdoors is a great addition to our existing Outdoor business. The minimal overlap in store locations and their out of town, one stop retailer approach complements the work we have done on the high street with Blacks and Millets and further strengthens our offering in the Outdoor sector.'
For the 53 weeks to January, Go Outdoors generated taxable profits of £4.9m from £202.2m sales. It will bolster JD Sports' Outdoor arm where an encouraging turnaround is in train; operating losses were pared from £4.5m to £2.3m in the seasonally quieter first half with the help of an improved Spring/Summer range.
Cantor Fitzgerald Europe's Freddie George likes the look of the deal, reiterating his 'buy' rating and 340p price target. George argues 'Go Outdoors should be a reasonable fit with the company', though he does note it is 'likely to be marginally dilutary to earnings in the short term'.
Half-time figures (13 Sep) from JD Sports revealed a forecast-busting 66% surge in underlying profit before tax to £77.4m, delivered on further strong like-for-like sales growth. Shares believes the Bury-headquartered retailer is set fair for a stonking Christmas as it continues to spearhead a European-wide boom in casual fashion.
