JD Sports Fashion signs JV agreement to enter South Korean market
JD Sports Fashion has signed a joint venture (JV) agreement to acquire a 15% stake in South Korean retailer Shoemarker’s (SMK) subsidiary Hot-T fascia (Hot-T) in order to enhance its global footprint.
The £5.5m proposed acquisition is set to mark JD’s entry into the South Korean market.
Under the terms of the agreement, the company has the option to further enhance its stake by 35% at the end of the year.
The sports retailer plans to exercise the option and to re-fascia the Hot-T stores as JD.
If the plan materialises, net assets of Hot-T are expected to be integrated into JD's accounts.
JD Sports Fashion executive chairman Peter Cowgill said: "We are delighted to be entering into this JV, which gives JD the opportunity to enter a new market of over 50 million people with a proven operator. This JV will further strengthen JD's global presence."
Even after the transaction is completed, Hot-T’s existing management team will continue to oversee its operations.
SMK operates two retail businesses, namely footwear retailer Shoemarker and athletic goods supplier Hot-T.
Dealing in sporting goods, Shoemarker has 114 stores in South Korea, while Hot-T has 23 stores, as well as its own website.
For the year ended 31 December last year, Hot-T’s revenue was KRW25.5bn (£16.9m), while its earnings before interest, tax, depreciation and amortisation (EBITDA) stood at KRW3bn (£1.99m).
In its latest half-year results, JD Sports, which has more than 1,200 stores across the UK and Europe, registered profit before tax of £102.7m, which represents an increase of more than 33% when compared to the corresponding period last year.