As expected, JD Sports has put Go Outdoors into administration – however, the retail group has bought back the camping chain as it sees it as a viable business if it can be restructured, pay down its debts and renegotiate leases.
Advisers appointed by JD Sports in May 2020 to look at how to make the Go business saleable drew up a plan that shows that, with the right restructuring and with “realism and flexibility in the future leases”, Go is a viable business. As a result, JD Sports has purchased the Go chain from the administrators – via a newly-formed subsidiary, JD Newco 1 – for £56.5 million. It plans to try and save as many stores and staff as possible.
A statement from JD Sports says: “Prior to making this decision, the Board considered a number of strategic options for Go which included the appointment of advisers in May 2020 to market the business for a potential sale. The Board examined the offers made through the marketing process together with the other options available to it and has ultimately determined that, if fundamentally restructured, Go has a future in the Group.”
At the point of administration, Go operated 67 standalone stores and a trading website. The Group has taken an initial 12 month licence such that it will continue to occupy all of the Go stores and, subject to realism and flexibility in the future leases, it is the Group’s intention to retain the majority of Go’s retail estate and preserve as many jobs as possible.
It is also the Group’s intention to honour the principal historic liabilities of the Go business including branded stock suppliers, HMRC liabilities on taxation, customer returns, and gift cards. Further, all pre-existing Go employees will transfer across to the new business with their previous terms and conditions of employment preserved.
Peter Cowgill, Executive Chairman, JD Sports Fashion, says: "As a consequence of COVID-19, Go Outdoors was no longer viable as previously structured and would have absorbed capital at an unsustainable rate for the foreseeable future. Having investigated all available options for the business, we firmly believe that this restructuring will provide Go Outdoors with a platform from which it can progress whilst remaining a member of the Group. Most importantly, we are pleased that it will protect the maximum number of jobs possible.
Landlords can expect some tough negotiations in the coming weeks as JD fights to save the stores it has. According to the company, the terms of the property leases in Go were extremely inflexible with the stores having an average remaining period to lease expiry of approximately 10 years with upwards only rent reviews, many of which are fixed at rates above inflation regardless of the market rent in the location. The chain is now looking for substantial changes here.
“We look forward to having positive conversations with landlords and agreeing new flexible lease contracts which reflect the widely reported challenges of reduced consumer footfall," says Cowgill.
JD Sports acquired Go almost four years ago for £112.3 million to consolidate its position in the outdoors market, while also giving it a new presence in out-of-town retail parks.
At the time Cowgill said: “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. I am excited by the future prospects this holds for the JD Group.”