JD Sports splashes out £396 million on stateside buy

● UK sports retailer hails ‘transitional’ deal for Finish Line across the Atlantic

UK sports retailer JD Sports is to make a bold plunge into the American market via the $558 million (£396m) acquisition of US sportswear company Finish Line in what it hailed as a “transformational” deal.

It will mean taking over 556 Finish Line branded retail stores across 44 US states and Puerto Rico, where the US group employs 3,700 full-time and 9,300 part-time staff.

While the outlets are expected to stay under Finish Line branding, JD Sports said it planned to trial a number of its own stores across the country following the acquisition.

Peter Cowgill, executive chairman of JD Sports which owns a controlling stake in Scottish outdoor retailer Tiso, said: “We are extremely excited to be joining up with Finish Line, a well-established US operator.

“The acquisition represents an excellent opportunity for JD to establish its market leading multi-brand proposition in the world’s largest ‘athleisure’ market.

“It immediately offers a major presence in the US, a clear next step to further increase our global scale.”

Cowgill said the companies had many similarities, including “a strong bricks and mortar offering complemented by an advanced and well-invested digital platform”. He added: “This is a landmark day for JD and will be transformational for the business.”

Retail analysts said the UK retailer’s move into the largest sportswear market was its boldest strategic move yet, increasing its importance to international brands such as Nike and Adidas.

JD will also benefit from Finish Line’s relationship with Macy’s, the upmarket US department store chain, serving as its exclusive retailer of athletic shoes both online and in-store where it operates 375 branded and 188 unbranded concessions.

Finish Line, listed on the Nasdaq stock market, reported revenues of $1.84 billion for the year to 3 March, 2018, in line with sales a year earlier, as pre-tax profits totalled $54m.

“The deal looks a sensiblypriced entry point into a market that JD must embrace to be considered a genuinely global player,” said Jonathan Pritchard, an analyst with broker Peel Hunt.

JD Sports said the transaction – which values Finish Line above its stock market value of $425m – is expected to make a “small incremental positive contribution” to JD’S results and earnings per share in the current financial year.

Finish Line’s executive team will be kept on following the takeover.

Finish Line chief executive Sam Sato said: “Finish Line has long admired JD and their commitment to serve customers with premium brands through a unique and innovative retail experience.

“We are thrilled to partner with them and look forward to realising the impact we will have on the marketplace together.”

The deal has yet to gain shareholder approval, but is expected to be completed as early as June this year.