JD Sports Fashion, the UK’s largest sportswear retailer, has announced plans to acquire American athletic fashion retailer Hibbett Inc for approximately $1.08 billion. This move is aimed at expanding the company’s presence in the southeastern United States and comes as shares in athletic clothing retailers have been under pressure globally due to weak outlooks from major sports apparel makers like Nike and Puma.
Last month, JD’s U.S. rival Foot Locker issued a warning on profits for 2024, while there was positive news from Adidas which raised its 2024 forecast due to strong demand for its sneakers. JD Sports, known for selling popular sports brands like Nike, Adidas, and HOKA, is optimistic about the market picking up momentum with events like the Euro soccer championships, Paris Olympics, and the introduction of new styles of trainers and track suits.
JD Sports will pay $87.50 per Hibbett share in cash, offering a premium of about 20% to Hibbett’s last closing price. Hibbett’s shares jumped 18% to $85.70 in premarket U.S. trading following the announcement. With Hibbett operating about 1,169 stores across 36 U.S. states, JD Sports believes the acquisition will significantly expand its geographic presence in the country and increase its North American revenues by approximately 40%. The company expects to contribute to its earnings in the first year of ownership with anticipated cost savings of at least $25 million from consolidation efforts.
The acquisition is expected to result in an enlarged group with combined revenues of approximately 4.7 billion pounds in North America, which is a significant increase from its current contribution of 32%.
