JD Sports, a leading sports and casualwear retail company in the UK, has criticized the Competition and Markets Authority (CMA) for expressing concerns about its merger with Footasylum. The CMA has raised worries that the merger could limit consumer choice and result in higher prices. Following a six-month investigation, the CMA concluded that the merger significantly reduces competition nationwide and proposed that JD Sports may need to sell the footwear business it acquired for £90 million last year.
Peter Cowgill, the executive chairman of JD Sports, strongly disagreed with the CMA’s assessment and accused the authority of misunderstanding the UK sportswear market. Cowgill argued that the competitive landscape described by the CMA does not reflect reality, citing the presence of multiple multi-brand retailers, major online players, and direct-to-consumer brands such as Nike and Adidas. He emphasized that anyone could verify this competitiveness by simply walking down a major UK high street or conducting a quick online search for Nike or Adidas trainers.
JD Sports highlighted that the UK sports retail market is characterized by competition not only among retailers but also with major online players and direct-to-consumer brands. Retail analysts, including Kate Ormrod from GlobalData, supported JD Sports’ viewpoint, stating that the CMA’s belief that Nike and Adidas would not become more competitive through direct-to-consumer channels is undoubtedly incorrect.
Despite the CMA’s concerns about reduced discounting, limited product range, and potentially poorer service, JD Sports is fully committed to challenging the decision. The company has until late February to propose an alternative course of action. The final decision will be made by the regulator on May 11th.
Although the CMA’s concerns pose a setback for JD Sports, the company remains optimistic about its future prospects. JD Sports anticipates a minimum profit growth of £48 million for the current year, aligning with analysts’ forecasts and falling within the estimated range of £403 million to £434 million. If the merger with Footasylum does not proceed, JD Sports is likely to explore other acquisition opportunities, potentially outside of the UK.
In conclusion, JD Sports is actively contesting the CMA’s concerns regarding its merger with Footasylum and has criticized the authority’s understanding of the sportswear market. The company remains focused on its growth strategy and expects positive financial results for the current year.
1) JD Sports Official Website
2) Competition and Markets Authority Official Website