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British sportswear chain JD Sports is accelerating its push into the US by snapping up New York-listed rival Hibbett in a $1.1bn deal, its biggest acquisition to date.
Aggressive acquisitions over the years have pushed JD Sports into more than 30 countries, including the US, where it now generates almost a third of its revenue.
The purchase, set to be completed in the second half of this year, is JD’s fourth significant move in the US market — which is often difficult for UK retailers to crack — following the 2021 acquisition of Baltimore-based DTLR Villa for $495mn.
The move by Britain’s largest sportswear retailer is part of an effort to become a “global sports-fashion powerhouse” set out by chief executive Régis Schultz after he joined in 2022.
The British sportswear chain opened its first five US stores under the JD brand in 2018 following the $560mn purchase of Finish Line.
The combined group would have revenues of about £4.7bn in North America, JD Sports said, adding that the region’s contribution to sales would increase to about 40 per cent, from current levels of about 30 per cent.
JD Sports will pay $87.50 per Hibbett share in cash, representing a premium of about 21 per cent to the US company’s last closing price. Hibbett’s shares rallied 14 per cent to $86.4 in premarket trading on Nasdaq.
Schultz told investors that the deal would add to JD’s earnings in the first full year of ownership, with cost savings expected to be at least $25mn.
Alabama-based Hibbett has 1,169 stores located in 36 states across the US. In the year to February, it generated net sales of $1.7bn and pre-tax profit of $131.6mn.
Hibbett’s share of 80 per cent stores with street locations fitted well with JDs other brands in the US, which were predominantly destination stores, said Schultz.
With its ownership of Shoe Palace, which has a big presence on the US west coast, and DTLR, which is established in the east, JD is hoping to fill in the gaps in the US market.
“You can easily see a scheme where we can cover the full country,” he said, adding that Hibbett’s warehouses in Alabama had excess capacity.
Mike Longo will continue as chief executive and president of Hibbett, while Jared Briskin will take on the role of chief operating officer at the US company.
Richard Chamberlain, an analyst with RBC Capital Markets, said the purchase would increase JD’s presence in the US market, but “the concern now is that JD is somewhat substituting organic growth with M&A”.
JD, which also has a presence in Europe, Asia and Australia, is becoming an important partner to brands such as Nike and Adidas, as they try to reach customers who do not shop with them directly.
Kate Calvert, an analyst with Investec, said that like the acquisition of Finish Line, the Hibbett deal “could turn out to be a well-timed acquisition at the bottom of a cycle”, adding that focus was likely to remain on the weak consumer backdrop in both the US and UK.
JD shares, which fell sharply after a profit warning at the start of the year, were up more than 5 per cent on Tuesday.
