JD Sports confirms it is exploring fundraising to support future acquisitions
JD Sports Fashion has confirmed it is exploring the possibility of a fundraising exercise to support future acquisitions.
The sports retail giant issued a statement to the stock market this morning stating it was "exploring additional funding options with a view to increasing its flexibility to invest in future strategic opportunities and that this may involve a non pre-emptive equity placing."
JD had been linked to a possible purchase of the Topshop and Miss Selfridge brands in partnership with US brand group Authentic Brands, but ASOS is now in exclusive talks with Arcadia's administrators to acquire those names. However JD and Authentic are said to be waiting in the wings should this deal not conclude as expected.
Before Christmas it also held talks with Debenhams over the potential purchase of some of the stricken department store's business, but following the collapse of Arcadia into administration, it pulled out of talks and Debenhams pursued liquidation proceedings. Yesterday it was announced that Boohoo had acquired the Debenhams brand and website but none of its stores.
Last month it acquired Shoe Palace, a sports footwear retailer based on the US west coast, for $681m and acquired Leicester-based independent menswear retailer Wellgosh for an undisclosed sum two weeks ago.
It has been reported that it could be looking to raise around £400m for future buys.
JD Sports has proved resilient to the crisis impacting other parts of the high street thanks to a surge in demand for sportswear from locked-down Britons and as customers have readily switched online.
Last month it raised its profit outlook to at least £400m for the year to 30 January, surpassing previous expectations of around £295m.
Total revenues, on a like-for-like basis, rose by more than 5% in the 22 weeks to 2 January compared with the same period last year.
Retail expert Greg Lawless, at Shore Capital, said: “We are not that surprised that the JD board are now considering an equity raise given its global ambitions and the potential merger and acquisition opportunities that might arise from the fallout of Covid in the retail sector, both in the UK and internationally.”
“To bolster its balance sheet with a potential fundraising will enable the company to widen its already extensive corporate development net, as it looks for further bolt-on opportunities,” he added.