Frasers Group, the owner of the Sports Direct chain founded by billionaire Mike Ashley, has agreed to buy a string of fashion brands from the 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 on Friday afternoon just before the market close—leaves JD Sports free to pursue expansion in its core segment of sports retailing while Frasers Group has landed a pick’n’mix of premium brands on top of an already burgeoning portfolio. It spans the high-end, from fashion retailer Flannels; Saville Row tailoring house Gieves and Hawkes; and international label Hugo Boss where Frasers has a 34% stake, to Jack Wills, department store retailer House of Fraser, and Sofa.com.
This latest deal saw eight of the businesses—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 remaining seven—Choice, Cricket, Giulio, Rascal Clothing, Tessuti (including Xile), Scotts, and Topgrade Sportswear (including Get The Label)—is expected in early 2023.
Frasers Group said that the acquisition would be funded from “existing cash resources” and, based on the most recently filed individual annual accounts, the businesses had aggregate gross assets of about £239 million and profit before tax of £5.3 million.
JD Sports’ decision to sell followed a strategic review led by CEO Régis Schultz whose goal is international and digital expansion of the group’s premium sports fashion fascias such as JD, Size?, Shoe Palace, acquired during the pandemic, and Tessuti.
In a statement, the recently appointed CEO, said: “We are convinced that the most significant opportunities lie in the continued international development of the group’s global sports fashion businesses.” This means greater focus on the JD fascia which has increased exposure in the American market. The brand now has more than 100 stores in the United States versus 66 in 2021, including a second country flagship on State Street in Chicago which opened in October.
A shift toward high-end
Under the leadership of Michael Murray, Frasers Group has doubled down on an ‘elevation strategy’ which has led to divestments, for example Bob’s Stores and Eastern Mountain Sports for $70 million. This has enabled greater focus on the group’s premium lifestyle division and the opening of flagship stores such as new Flannels stores including a flagship in Liverpool in June where the emphasis is very much on 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. Interim results at Frasers Group, released on December 8 for the half year to October 23, showed the unit grew by 25% to £534 million ahead of the much bigger UK sport retail unit’s 12% growth to £1.53 billion. The high growth was largely on the back of new Flannels store openings.
While controversy has dogged Mike Ashley, the majority shareholder of Frasers Group, he has been recognized for his achievement in turning a single sports shop in Maidenhead, near London, in 1982, into a 1,500-store global empire today.