JD Sports mulls share sale amid acquisition spree

Sportswear retailer JD Sports Fashion has confirmed it is considering an investor cash-call as it looks to continue its acquisition spree.

The group said it is considering funding options, including an equity placing, to boost its ability to “invest in future strategic opportunities”.

It comes after Sky News reported late on Monday that JD Sports is in talks over a potential £400 million share sale to reload its takeover war chest after last month’s £491 million acquisition of US chain Shoe Palace.

Shares in JD Sports dropped 2% after the announcement.

The Bury-based retailer has been snapping up firms across the UK and US over the past two years, with the Shoe Palace deal boosting its presence in America following the deal to buy the Finish Line shoe-store chain in 2018.

JD Sports’ expansion strategy also saw the group agree a £90 million deal to buy UK rival Footaslyum early in 2019.

The move was blocked by the UK competition watchdog but was granted a reprieve last month after the Competition Appeals Tribunal reversed the Competition and Markets Authority (CMA) block.

JD Sports is also reportedly said to have been interested in buying up parts of Sir Philip Green’s collapsed Arcadia empire and had been interested in Debenhams before pulling out of the process last month.

While Asos has now entered exclusive talks to buy Topshop from administrators to Arcadia Group, it is thought that JD Sports is waiting in the wings should those discussions fail.

JD Sports has proved resilient to the crisis impacting other parts of the high street thanks to a surge in demand for sportswear from locked-down Britons and as customers have readily switched online.

Last month it hiked its profit outlook to at least £400 million for the year to January 30, surpassing previous expectations of around £295 million.

Total revenues, on a like-for-like basis, rose by more than 5% in the 22 weeks to January 2 compared with the same period last year.

Retail expert Greg Lawless, at Shore Capital, said: “We are not that surprised that the JD board are now considering an equity raise given its global ambitions and the potential merger and acquisition opportunities that might arise from the fallout of Covid in the retail sector, both in the UK and internationally.”

“To bolster its balance sheet with a potential fundraising will enable the company to widen its already extensive corporate development net, as it looks for further bolt-on opportunities,” he added.