JD Sports takes loss on forced sale of rival

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2nd August 2022

Bite-sized business news from the UK and beyond

Good morning The world of celebrity jet Twitter is an interesting place. In case you missed it, Kylie Jenner, Elon Musk and Taylor Swift are among the names being criticised for their carbon-heavy mode of fast travel.

Today's stories

JD Sports takes loss on forced sale of rival
Publisher profits boom as students return to school

RETAIL
JD Sports takes loss on forced sale of rival

What happened?
Yesterday JD Sports announced it had sold fellow sportswear retailer Footasylum for £38m, well below the £90m it paid more than three years ago.

How did we get here?
It was all the way back in March 2019 when JD Sports first agreed to buy Footasylum. But since then the sportswear retailer has been locked in battle with competition regulator, the CMA, to get the deal approved.

The CMA blocked the deal twice claiming that it would lead to worse outcomes for consumers with “higher prices, less choice and a worse shopping experience”.

Sports retailers have struggled since 2020 with lockdown leading to long periods of store closures. On top of this, brands like Nike and Adidas are focusing on selling on their own websites which is more profitable than selling through retailers.

All this, JD Sports says, gives more reason for the merger with Footasylum so they can both survive.

But the CMA was unconvinced. It says that online sales on both websites have been strong enough to counteract the impact of the pandemic and instore sales have rebounded strongly since lockdown restrictions eased.

As a result it ordered JD Sports to sell Footasylum. It’s being bought by private equity firm Aurelius, which owns Lloyds Pharmacy.

Trying to get the deal done has been costly
In February both companies were fined £5m after sharing commercially sensitive information – something you’re not supposed to do when you’re under investigation by the CMA.

JD Sports revealed it had spent millions on competition lawyers. It also wrote off £56m last year after it realised the value of Footasylum was less than it had thought, and £7m in costs in 2020 directly related to the deal.

Other stories to keep you in the loop

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Heineken puts prices up by 9% and warns of more rises to come
British Airways pauses Heathrow short-haul flight sales
New property register aims to stop money laundering
Waitrose removes best-before dates from fresh food to reduce waste
Energy bills forecast to hit £3,615 a year

MEDIA
Publisher profits boom as students return to school

The return of students sitting exams and huge demand for English language tests helped textbook publisher Pearson post £131m in profits for the first half of 2022, up from just £18m the year before.

The closure of test centres and cancellation of exams during the Covid lockdowns heavily impacted the UK’s largest education firm. In recent times it’s been trying to pivot its business model away from physical books in the wake of the shift to online learning, accelerated by the pandemic.

One of the initiatives was to launch a Netflix-like subscription service in the US, its biggest market, that gives users access to educational materials for $10 a month. The company is also planning to take out £100m in costs to streamline operations.

Next up the metaverse: Pearson textbooks are re-sold up to seven times and the publisher wants to cash in on this second-hand market. It said it’s looking at non-fungible tokens (NFTs) as a way of earning additional revenues on the re-sale of books and has a whole team dedicated to building out this capability in the metaverse - a proposed network of vast digital worlds and one of the most hyped areas of the tech scene.

Stat of the day

Last month England had the driest July since 1935

Interesting links from around the web

5 recession-proof jobs with consistently high demand, according to economists
How to organise your free time
8 signs someone is trying to scam you

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JD Sports takes loss on forced sale of rival

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