9th May 2023 14:41
(Alliance News) - Analysts were pleased with JD Sports Fashion PLC's acquisition of Groupe Courir SAS on Tuesday, labelling the move deeper into Europe as "strategically sound".
The Lancashire-based sportswear retailer said it plans to buy Courir, a Paris-based footwear and apparel retailer with 313 stores across six European countries.
JD Sports said it is in exclusive talks to buy Courir for an enterprise value of EUR520 million, including EUR195 million in assumed net debt. It expects the transaction to close in the second half of 2023.
Courir is majority owned by private equity firm Equistone Partners Europe, which bought Courir in 2018, carved out from Group Go Sport.
JD added that the transaction will need to be notified to the European Commission in accordance with EU law and is conditional on merger control approval.
Out of 313 Courir stores, 191 are in France, with 24 in Spain and 22 in Belgium. The company in 2022 recorded a pretax profit of EUR47.4 million and revenue of EUR609.8 million.
"The transaction is aligned with JD Sports' strategy of investing in complementary concepts and expanding its presence in Europe. Courir's focus on the female consumer will enhance JD Sports' capabilities and global opportunities. The acquisition of Courir is a significant step in JD Sports' growth plans and demonstrates its commitment to adding new stores in the region," Shore Capital Eleonora Dani said.
Dani added that she believes the move to be "strategically sound", with it expected to increase financial 2024 pretax profit by 4%.
JD Sports said: "At the group's recent capital markets event, we emphasised the importance of 'complementary concepts' to leverage our existing premium concepts, including JD. This proposed acquisition is in line with that growth strategy as Courir operates stores with a primary focus on a female consumer."
Looking ahead, Peel Hunt said: "We expect further mergers & acquisitions to follow. JD is keen to continue its expansion into most of its current territories and Courir fits the bill. The balance sheet is of course very strong and we expect more of the same."
JD Sports already has a presence in both Germany and in Spain and Portugal.
Peel Hunt added that it expects JD to "showcase" a strong set of results for financial 2023, as well as a "good start" to the new financial year. JD will release its results for the financial year that ended January 28 on Wednesday next week.
JD Sports shares rose 1.9% to 164.95 pence each on Tuesday afternoon in London.
"JD Sports Fashion Plc's shares are currently trading at a forward price-to-earnings ratio of 5x, representing a significant discount compared to its UK retail and international peers. This discount appears unwarranted given JD Sports' clear path to growth and profitability," Shore Capital's Dani said.
"By leveraging Courir's strong reputation in the European sportswear community, JD Sports can unlock its global potential."
By Sophie Rose, Alliance News reporter
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