JD Sports (JD.) has announced plans to buy Nasdaq-listed sporting goods group Hibbett (US:HIBB) for almost $1.1bn (£880mn) – sending its shares up more than 6 per cent this morning. Like its buyer, the Alabama-headquartered retailer specialises in “sports fashion” (i.e. trainers and streetwear). It has some 1,200 stores located across the US south and midwest regions.
In a statement, JD said it will fund the transaction, and refinance Hibbett’s debt, via a combination of existing US cash resources of $300mn and a $1bn extension of its bank facilities. Though investors have welcomed the news, the stock is still down more than 20 per cent across the year to date on worries about sluggish consumer activity.
The company reckons the combined revenues of Hibbett and its existing North American business are approximately £4.7bn, which means the region’s share of group sales will grow from 32 per cent to 40 per cent. RBC analysts noted that JD currently has a low-single-digit market share in the US, so the deal will “materially increase” its presence there.
However, it will further cement the link between JD’s fortunes and those of Nike (US:NKE), which represented around 70 per cent of Hibbett’s inventory purchases in FY 2023. Some estimates suggest the iconic sportswear brand already contributes around half of JD’s global sales.
“We think the concern now is that JD is somewhat substituting organic growth with M&A,” RBC’s analysts added. Either way, it is certainly expanding its presence in the world’s most important sportswear market.
