Unravelling the incestuous nature of the sportswear sector is not as hard as you think.
Unravelling the incestuous nature of the sportswear sector is not as hard as you think. You just need to remember that everyone has been to school with or down the pub with everyone at some point over the past 30 years. So while there is a lot of blokey banter, in practical terms if one sportswear company sneezes, the whole sector catches a cold.
So JD Sports Fashion’s move for the struggling JJB Sports, which was confirmed this week, is not as surprising as some might think. Although JD Sports Fashion immediately trotted out a denial that its majority shareholder Pentland Group had anything to do with its takeover strategy, it’s hard to believe that the £1bn firm, which owns brands like Speedo and Mitre via its Pentland Brands division, wouldn’t welcome having JJB Sports, one of its biggest customers, financially secure. Pentland Group also walked away from a potential acquisition of the tumultuous Blacks Leisure, another of its large customers, just weeks ago.
It would seem pointless for the Competition Commission to get involved, though some analysts have suggested Sports Direct’s 12% holding in JD Sports Fashion (stick with me here) may complicate things. Sports Direct’s branded division, IBML, also supplies JJB Sports with labels including Everlast and Slazenger, while JD Sports Fashion itself supplies JJB with labels such as Sergio Tacchini - yes, it’s a potential flu pandemic.
Whoever owns who, there are clearly differentiated positions in the market for JD’s chains and JJB Sports. I would expect JD’s exceptional management team to work hard to maintain a point of difference rather than merge a genuine sportswear retailer with what is really a branded casualwear group. This is not about consolidation or the market shrinking, rather about stabilising its future and the true market experts taking back control.
Jessica Brown Editor