JD Sports is selling Footasylum to Aurelius Group for £37.5m, it has announced today. The deal comes almost nine months after the final Competition and Markets Authority decision that JD Sports must sell Footaslyum in order to keep the sports fashion market fair for both online and in-store shoppers.
Contracts have now been exchanged on a deal that values Footasylum at just 34% of the £90m at which JD Sports valued the sports fashion business when it agreed to buy it in March 2019. JD Sports and Footasylum were also subsequently fined almost £5m by the CMA for breaching an order not to share sensitive information during the competition investigation.
JD Sports said today it had worked with the CMA to ensure that the sale to European asset manager Aurelius would be acceptable in the light of the final undertakings that the CMA issued on January 14, following its final decision of November 2021 that the sale should go ahead.
Kath Smith, interim chief executive of JD Sports, says: “I would like to sincerely thank the teams at Aurelius and Footasylum who worked collaboratively with the CMA to agree this transaction. We wish both parties every success for the future.”
Footasylum bought JD Sports in April 2019, and within months the CMA launched an investigation into the deal. It ruled in May 2020 that JD Sports must sell Footasylum but the CMA was ordered to reconsider by the Competition Appeal Tribunal in November 2020. The tribunal said the watchdog had not gathered enough evidence, including around the effects of the pandemic on customer behaviour. In November 20201, the CMA cited its research findings that that JD Sports is “far and away the closest alternative for shoppers at Footasylum”. It also said that the growth of direct-to-consumer sales by brands such as Nike and Adidas in the wake of the pandemic did not change that.
In its inquiry, the CMA found a wide overlap between the customers of Footasylum and JD Sports. It carried out a survey that found that 50% of online shoppers would go to JD Sports if they could not buy clothing at Footasylum, and 43% would do the same for footwear. Similar results were found in surveys of in-store shoppers. The only solution, said the CMA, was to require JD Sports to sell Footasylum.
The two businesses had close links before the acquisition. Footasylum was founded in 2005 by David Makin, who previously co-founded JD Sports with John Wardle. At the time of its acquisition by JD Sports, Footasylum’s executive chairman was Barry Bown, who was previously chief executive of JD Sports for 14 years, while Makin’s daughter Claire Nesbitt was Footasylum’s chief executive.
UPDATE: JD Sports announced today (Tuesday) that Régis Schultz, head of retail at Dubai-based conglomerate the Al-Futtaim Group and former chief executive of Monoprix, is set to join JD Sports as chief executive in September.
Andrew Higginson, non-executive chair of JD Sports, says: “Régis brings exactly the characteristics we were looking for. He is a retailer through and through with experience across all types of retail formats. He has also delivered transformational change through digitisation in a number of his roles. Finally, he has significant international experience which will be very important as he works with myself and our senior team to execute on our growth strategy.”
Schultz says: “JD has consistently proven itself to be one of the most successful operators of multi-brand retail formats in the world. We are committed to going deeper in the international development of our brands applying our experience and executional expertise and further enhancing our market leading multi-channel customer experience. I am very excited to be joining the group and look forward to working with the team to deliver on the growth opportunities.”
JD Sports is a Leading retailer in RXUK Top500 research, while Footasylum is ranked Top150.