JD Sports Fashion, a UK-based sportswear retailer, has proposed to buy US athletic fashion retailer Hibbett Inc for around $1.08 billion. The move is strategic as JD Sports aims to expand its presence in the southeastern United States, where Hibbett operates approximately 1,169 stores in 36 US states.
The acquisition comes at a time when major sportswear makers such as Nike and Puma have faced pressure globally, with weak outlooks and declining sales. However, JD Sports is optimistic about boosting the market with events such as the European Football Championship, the Paris Olympics and the introduction of new styles of trainers and tracksuits.
JD Sports will pay $87.50 per Hibbett share in cash, offering a premium of about 20% to Hibbett’s last closing price. The deal is expected to add to JD Sports’ earnings in the first year of ownership and increase its combined revenue in North America to approximately £4.7bn. With the region’s contribution to total sales increasing to around 40% from the current 32%.
Last month, JD’s US rival Foot Locker issued a profit warning for 2024 due to weak demand for athletic apparel. However, there was positive news from Adidas which raised its forecasts for 2024 due to strong demand for its sneakers. Despite this setback, JD Sports believes that it will significantly expand its geographic presence in the country with this acquisition.