UK retail heavyweight, JD Sports, will begin its battle with Rebel Sports in April with the opening of its first Aussie store in Melbourne.
IRW understands JD, which bought the Glue youth fashion stores in September last year, will open their first store in Melbourne Central, with hoarding already up as the store is fitted out, ahead of another six stores by the end of the year.
When contacted by IRW, Brian Small chief financial officer of JD Sports, was unable to comment due to being the sports retailer being a listed company in close period ‘til April 12.
JD Sports Fashion has been 57 per cent owned by Pentland Group since mid-2005, a group whose principal interests are in sports and fashion brands, such as Lacoste and Speedo. It operates over 840 stores across the United Kingdom, the Republic of Ireland, Germany, the Netherlands, France and Spain.
JD holds nearly 17 per cent of the £7.7 billion industry in the UK. The UK sports retailer confirmed in its half-year report last year that it had acquired, via its newly incorporated subsidiary, JD Sports Fashion Holdings Australia Pty, an 80 per cent stake in Next Athleisure, which operates 32 fashion stores and an e-commerce channel.
JD Sports has engaged Hilton Seskin, chairman of Next Athleisure and an Australian retail veteran who founded Rebel Sport in Bankstown, Sydney in 1985, and a local team to focus on identifying and leasing prime sites for JD Sports stores, which are expected to be approximately 600sqm in size.
“It’s the fashion end of sport – Rebel is core sports, then you’ve got fashion businesses; it sits in the middle,” Seskin said to IRW when the UK announced its Aussie plans.
“The strength of JD will mean that the amount of new product coming to market will create some market accretion, because we’re going to add to it, which is what we want. To bring in new businesses just to cannibalise the market is not the smart thing to do. We just see that the market is going to grow with the JD offering.”
The top four players (Super Retail Group, The Athlete’s Foot, Lorna Jane and Foot Locker) in the industry account for almost 67 per cent of revenue, indicating dominant positions in the market.
JD’s entry could spell concerns for RCG Corporation, the owner and operator of brands including The Athlete’s Foot, Hype DC, Platypus Shoes and Timberland, which, despite recording a 34 per cent rise in profit for the half to $23.3 million in its trading update late last week, reduced its full-year guidance citing challenging trading conditions.
The Athlete’s Foot recorded sales of $96.2 million for the half-year, which was down two per cent on the previous year “as a result of Boxing Day falling outside the December trading period this year”, according to co-CEO of RCG, Hilton Brett. EBITDA fell 15 per cent to $4.8 million, which Brett said was both as a consequence of the timing of Boxing Day and the temporary closure of several stores that were refitted in the new performance format.
The Athlete’s Foot converted seven stores to a new look performance format, which Brett said RCG is “using the trading results from these stores to gain further insights and refine the offer”.
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