- JD Sports buys back Go Outdoors in GBP 56.5 million pre-pack deal after appointing administrators
- JD Sports appoints Deloitte LLP as Go Outdoors’ administrators
- Go Outdoors sold back to JD Sports in pre-pack deal worth GBP 56.5 million
- Majority of Go Outdoors’ real estate and jobs to be preserved
By guest author Ava Szajna-Hopgood from Retail Gazette
JD Sports has announced the appointment of Michael Magnay and Daniel Butters of Deloitte LLP as joint administrators for its Go Outdoors business, before buying it back in a pre-pack deal for GBP 56.5 million.
Citing the impact of Covid-19 closures, as well as “extremely inflexible” terms on its property leases, JD Sports said that the “the future viability of the business has become materially uncertain”.
Enforced store closures combined with upwards-only rent reviews on its property portfolio meant that Go faced paying fixed rates at above inflation “regardless of the market rent in the location”.
“Such factors have resulted in the Board deciding that it is not in the best interests of the wider Group, and its shareholders, to provide continued financial support to Go in its existing form,” said a company statement from JD Sports on Tuesday evening.
The parent company noted that other options had been in consideration, including putting the business up for sale.
Instead, JD Sports has chosen to “fundamentally restructure” Go Outdoors, a strategy it believes will give the retailer a future as part of its wider retail group.
A newly incorporated subsidiary JD Newco 1 Limited has re-acquired the business as part of a pre-pack sale.
The majority of the assets of Go from its administrators for £56.5 million which will help pay back some of its debts to JD Sports.
Go will continue to operate all of its 67 standalone stores for the next 12 months, with the intention of retaining the majority of Go’s retail estate and jobs.
Gift cards and customer returns will also be honoured, and all pre-existing Go employees will transfer across to the new business with their previous terms and conditions of employment preserved.
“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,” said JD Sports executive chairman Peter Cowgill.
“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.
“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,” Cowgill added.