After an acquisition in France two years ago and another one in Ireland last April, JD Sports Fashion, the leading British sports fashion retailer, is moving into Spain by purchasing Sprinter, a sporting goods retailer with 47 large stores, mostly in the southwest of the country. Split into four trading companies, Sprinter reported an operating profit of €2.1 million on sales of about €80 million for 2009.
The last few weeks of trading have been weak at JD, as detailed further, but in the last years the sports retailer has performed robustly in an otherwise rough U.K. market. This has enabled JD to build up a strong financial position and to take advantage of the weak economic situation in several European markets. In 2009 it acquired Chausport, a French sports retailer with 75 small stores, and last April it bought Champion Sport, a chain with 22 stores in the Republic of Ireland and another in Northern Ireland, complementing a network of eight JD sports stores in Ireland.
Sprinter was formally bought by JD Sprinter, a new joint venture in which JD holds a controlling share of 50.1 percent. The remaining 49.9 percent of JD Sprinter's shares are owned equally by the Segarra family, who founded Sprinter, and the Bernad family, who have been investors in Sprinter for 15 years. The Segarra and Bernad families have put the Sprinter companies into JD Sprinter in exchange for their shares in the new joint venture, while JD has made a cash investment of €20.0 million in JD Sprinter to acquire its part of the shares in the new holding company.
Sprinter has been one of several retail companies belonging to the Fime Sport Shoes group, which is owned and led by Silvestre Segarra. The Bernad brothers are well known in the Spanish sports industry for their ownership and management of Estudio 2000: This company long held a license for the Puma brand in Spain and refused to hand it over to the German company, as allegedly agreed, at the beginning of last year, causing a drawn-out legal battle that has just produced a ruling by a district court in Madrid, as reported in another article in this issue.
Based in Elche, the town near Alicante where Estudio 2000 is based, Sprinter was established in 1981 and it has become one of the leading sports retailers in Spain, competing with Décathlon, Décimas and Forum Sport, among others. Its offering includes functional sports products and fashion lifestyle ranges from international brands and a raft of private labels, covering apparel, footwear and equipment. Its private labels are Silver for sports fashion, Araqua for water sports, Mítica for cycling, Irso for running products, Ilico for fitness equipment, Boriken for outdoor products and Pronton for racquet sports.
Most of the Sprinter stores are between 1,500 and 2,000 square meters and located in the suburbs of large cities, including some retail parks in the south of the country. Store locations are concentrated in Andalusia and Valencia. About half of Sprinter's product range consists of apparel, compared with 30 percent for footwear and 20 percent for accessories.
JD said that it wanted to open more Sprinter stores, probably to spread the banner around the country, and that a joint venture would be set up between JD Sprinter and JD to launch the JD banner as a more fashion-oriented retail format in Spain, as it has done in France. JD would have an effective shareholding of 65 percent in this joint venture.
The acquisition of Sprinter enables JD to expand its European retail network, possibly to the benefit of the brands it owns, such as Fenchurch, Kooga and Canterbury, and licenses. The deal may also benefit the many brands owned or licensed by the Pentland Group, which has a majority stake in the JD group, although Pentland insists on keep JD as a separate operation.
JD Sports Fashion's investment in the Spanish market follows a recent move by Sports Direct International into the Portuguese market through the acquisition of a local sporting goods retail chain, Megasport.
For 2009, Sprinter reported a pre-tax profit of €2.1 million and aggregated gross assets of €57.3 million. However, JD pointed out that these assets did not reflect consolidation adjustments that would ordinarily be made if there were a group structure in place. On a pro forma consolidated basis, the net assets at the time of the acquisition were estimated at about €5 million.
Separately, JD has acquired Cecil Gee, a loss-making British men's wear chain. JD has bought the business and assets of eight stores trading as Cecil Gee along with the Cecil Gee name and an appropriate level of stock from Moss Bros Group plc, for £1.7 million (€1.9m-$2.7m) net. Cecil Gee currently has nine stores, but one of them is to be converted to a Moss Bros outlet.