JD Sports has snapped up the assets of failed outdoor retailer Blacks Leisure in a cash deal worth £20m.
The company announced today it had taken over the Northampton-based Blacks which, it said, had an operating loss of £2.5m.
Staff at the 306 Millets and Blacks stores now face a worrying wait as the new owners decide which shops to close. Headquarters staff also face cuts.
JD Sports, which is 57 per cent owned by Berghaus and Brasher parent company the Pentland Group, said in a statement: “We will evaluate the performance of each store in the coming months in order to reach a conclusion about the number of stores which will be retained long term.”
It added: “Given that the acquisition has been completed in the quietest trading point of the year and with low current stock levels, we anticipate that the acquisition of Blacks will lead to a minor reduction in earnings in the remainder of the year to 28 January 2012.
“Thereafter, the earnings impact of Blacks will depend on how quickly we can deal with the store portfolio, rejuvenate the offer and realise the necessary cost reductions and synergies.”
JD Sports said it would retain a senior management team at Blacks led by the Chief Executive, Julia Reynolds.
Peter Cowgill, executive chairman of JD Sports Fashion, said: ”We are delighted to add another leading multi-branded retail proposition to our portfolio of retail businesses.
“We believe with the support of JD’s operational disciplines and financial strength, along with the existing Blacks management team, we can restore the Blacks business to a profitable market leading position.”
The £20m package for Blacks was made after the company went into administration with debts of £36m.
A statement from Blacks Leisure said Brian Green, Richard Fleming and David Costley-Wood of KPMG had been appointed administrators. It added : “The company also announces completion today of the sale by the administrators of substantially all of the trade, assets and brands of the group to a wholly owned subsidiary of JD Sports Fashion for a total cash consideration of £20m.
“The net proceeds of the sale will be used to repay the company’s outstanding debt to its lender, Bank of Scotland.
“As previously announced, there will therefore be no value attributable to the company’s ordinary shares.”
JD Sports’ takeover of the ailing company is a blow to its biggest shareholder, Mike Ashley’s Sports Direct, which saw its holding, worth £1.01bn at the high point of Blacks’ shares last year, wiped out. Sports Direct showed early interest in acquiring Blacks but withdrew its offer. It was believed to be one of four parties, including Dragons’ Den entrepreneur Peter Jones, in the running to buy the failed company’s assets.