JD Sports is “perplexed” and “disappointed” after the CMA announced a preliminary decision to block its planned purchase of Footasylum following an appeal.
Kip Meek, chair of the group conducting the inquiry, said the deal “would see Footasylum bought by its closest competitor,” which could lead to a worse shopping experience for customers facing higher prices, a smaller range of products and fewer discounts.
Peter Cowgill, Executive Chairman of JD Sports Fashion, said he was “perplexed and again disappointed” by the decision. He urged the CMA “to reconsider its position before making its final determination.”
The news comes after the company appealed the CMA’s previous ruling prohibiting the acquisition in May 2020.
JD Sports said it “remains committed to its transaction goal” and questioned the CMA’s findings.
The company accused the competitions watchdog of failing to adequately account for the expanding role of major brands, Nike and Adidas, in the trainers market. JD Sports pointed out that the rise of online shopping during the pandemic meant Nike and Adidas were making the bulk of their sales directly to customers rather than sending stock to outlets.
Cowgill said: “we have made compelling submissions on the committed positioning of the global brands towards Direct to Consumer and the consequent impact on an extremely competitive marketplace.”
Despite changes to the retail landscape JD Sports performed strongly during the pandemic. Revenue in the 2020 and 2021 financial years topped $6bn while the company last year opened its first department store in Times Square, New York. Share price is trading up 0.048 per cent today.
The CMA will take views on its provisional report until 16 September and possible remedies by 9 September. The authority said it will assess all evidence before making a final decision.