JD Sports lines up administrators for Go Outdoors
JD Sports has today confirmed to investors that it is weighing up administration for Go Outdoors, after speculation that an official appointment could come within days.
JD Sports said this morning that it has “considered a number of strategic options for Go and that Go’s directors have lodged the notice [to appoint administrators] in court”.
The notice provides JD Sports with a moratorium on Go Outdoors’ activities and property for 10 business days, meaning creditors cannot take action before then without permission from the court.
“Administrators have not yet been appointed and the group will make no further comment at this time,” it added.
Shares in JD Sports dropped almost two per cent as trading began in London.
Big Four accountancy giant Deloitte is said to have been lined up by JD Sports as administrator for Go Outdoors, which employs about 2,400 people across 67 stores.
The outdoor sports chain, which sells hiking and camping equipment, has struggled along with many other retailers during the pandemic. However its financial situation was already dire before the outbreak, reporting a £40m loss in the six months to 3 August last year.
All of Go Outdoors’ stores were shuttered in April, and began to reopen last month. The continued closure of campsites and restrictions on unnecessary travel are likely to have stunted its return to business.
JD Sports bought Go Outdoors for £112m in 2016. The firm also owns the Blacks and Millets camping brands.
“Like many general retailers, Go Outdoors has been hit by higher operating costs including rising business rates and property rents in recent years,” said analysts at Shore Capital Markets this morning.
“Given that the Covid pandemic the company is now looking to restructure the division to make it more sustainable and the administration process allows it the optionality to restructure the store portfolio.”
AJ Bell investment director Russ Mould said JD Sports’ Go Outdoors should have benefited from a rise in people holidaying within the UK during the recent travel ban.
But he said any benefit to Go Outdoors’ sales may have arrived too late.
“Closure of Go Outdoors’ stores during lockdown will have been negative for sales despite it also having some support in the form of online operations, compounding a pre-pandemic problem that the business was already struggling,” he added.
“JD Sports probably had good intentions to grow the business when it bought the company for £112m in 2016. It now looks as if the acquired business hasn’t been given enough attention, effectively taking a back seat while JD concentrated most of its effort on its shoes and athleisure empire.
“JD has been exploring its options with regards to the business, yet it seems likely this could be yet another retail operation to go into administration.”