JD Sports shrugs off nuclear fears to strike South Korean deal

KIMS BRIDGE
Sep 18, 2017
2 min read

JD Sports shrugs off nuclear fears to strike South Korean deal

By Ashley Armstrong, The Telegraph, Sept. 15, 2017

JD Sports has bought a stake in a South Korean shoe retailer in a joint venture to expand into the region, despite heightened diplomatic tensions in the regions and the threat of a nuclear attack from across the border.

The British sportswear retailer announced that it had bought a 15pc stake for £5.5m in South Korean chain Hot-T on the same day that North Korea fired another missile that flew over Japan.

Retail expert Nick Bubb said: "It’s a brave man who would go to South Korea at the moment, given the threat of conflict with North Korea, but it’s still a big market of over 50m people and hopefully Peter Cowgill of JD Sports has been able to negotiate a good entry point."

JD Sports will rebrand the 23 Hot-T stores and has a call option to buy a further 35pc stake in the chain after the South Korean business files its accounts at the end of the year.

Analysts at Investec said the deal was "financially immaterial but strategically interesting" as South Korea is Asia's third largest retail market with a fragmented sportswear sector.

"South Korea is an attractive market long term given the size of the population, though the economy is currently affected by the political situation and China’s ban on its residents traveling to South Korea," said Kate Calvert at Investec.

JD Sports is focusing on international expansion to maintain its strong sales growth over the past few years on the back of the booming athleisure trend. Earlier this week the retailer reported a 41pc jump in sales to £1.3bn while pre-tax profits lifted by a third to a record £102.7m.

The company has already announced that it plans to open one new shop a week across mainland Europe but analysts at Peel Hunt have suggested that the new South Korean venture could pave the way for further expansion across Asia