Shares in JD Sports Fashion jumped more than 4.3 per cent this afternoon, as the retailer confirmed it had sold its struggling fashion arm Bank.
Restructuring specialist Hilco Capital has bought the business for an undislosed sum through one of its subsidiaries. JD Sports Fashion said the move “should result in a substantial recovery of its intercompany loan”, the exact details of which will be confirmed “in due course”.
It added the overall writedown as a result of the sale would “not be material to the group net assets position”. There was no comment on how it would affect jobs.
Executive chairman Peter Cowgill explained: "We have decided that we must prioritise future investment in the Sports fascias and consequently we believe that the sale of Bank is in the best interests of the group. We shall continue to support the broadest possible range of fashion brands within the group."
Investors backed the move today, with JD's share price rising 4.3 per cent in afternoon trading.
Despite attempts to turn the business around, Bank has been struggling for some time, and in the year to February 1 recorded a pre-tax loss of £8.1m, excluding exceptionals, with gross assets of £51.7m. Its underperformance marred an otherwise strong set of results for the wider group.
Hilco has invested in a number of troubled retailers in recent years, including HMV, Woolworths, Borders and Habitat.
According to its website, while there is “no such thing as a typical Hilco investment”, targets tend to be stressed or distressed, underperforming, with debts or “identifiable problems which can be resolved through the application of our financial and/or operational restructuring expertise.”