Restructuring saves Go Outdoors and hundreds of jobs
JD Sports Fashion, the owner of the Go Outdoors retail chain, has announced a deal that preserves most of its 2,400 jobs, and honours existing agreements with suppliers.
The Bury-based business appointed Michael Magnay and Daniel Butters of Deloitte as joint administrators of Go today.
But, it has subsequently acquired Go Outdoors from the joint administrators for £56.5m and declared the business has a future as part of the overall group.
It said it will keep all Go Outdoors’ outlets open for a year, during which it will enter into talks with landlords in a bid to gain more favourable terms on the properties.
Earlier this week the directors of Go Outdoors filed a Notice of Intention to appoint Administrators, which gave the business a 10-day moratorium.
Shortly before 6pm tonight (June 23) JD Sports issued a statement to the stock exchange revealing its actions.
It said the enforced closure of Go’s stores on March 23, as lockdown was announced, brought into sharper focus the operating costs of the business.
Specifically, the terms of the property leases in Go were extremely inflexible. Stores had an average remaining period to lease expiry of around 10 years, with upwards-only rent reviews.
In May JD Sports appointed advisers to market Go for a potential sale.
But, in view of the response to those actions, the board has decided the best option was to restructure the Go business completely.
The statement said: “If fundamentally restructured, Go has a future in the group.”
So, via a newly-incorporated subsidiary – JD Newco 1 Limited – Go has been re-acquired from its administrators.
JD said the £56.5m consideration returns to the group as partial repayment against its historic indebtedness.
It also confirmed that this proposal was reviewed and cleared in advance by the independent Pre Pack Pool.
Go operates 67 standalone stores and a trading website.
JD said the group has taken an initial 12 month licence and will continue to occupy all of the Go stores.
“Subject to realism and flexibility in the future leases, it is the group’s intention to retain the majority of Go’s retail estate and preserve as many jobs as possible.
“It is also the group’s intention to honour the principal historic liabilities of the Go business, including branded stock suppliers, HMRC liabilities on taxation, customer returns, and gift cards.”
The statement also confirmed that all pre-existing Go staff will transfer across to the new business with their previous terms and conditions of employment preserved.
JD Sports executive chairman, Peter Cowgill, said: “As a consequence of COVID-19, Go Outdoors was no longer viable as previously structured and would have absorbed capital at an unsustainable rate for the foreseeable future.
“Having investigated all available options for the business, we firmly believe that this restructuring will provide Go Outdoors with a platform from which it can progress whilst remaining a member of the group.
“Most importantly, we are pleased that it will protect the maximum number of jobs possible.
“We look forward to having positive conversations with landlords and agreeing new flexible lease contracts which reflect the widely reported challenges of reduced consumer footfall.”
Go Outdoors began as Sheffield’s Camping and Caravanning Centre in 1969 before being purchased and rebranded in 1998 by Paul Caplan and John Graham.
JD Sports acquired the business for £112m in May 2017, following approval by the Competition and Markets Authority.
The business kept its Sheffield headquarters until earlier this year when 120 head office staff moved to JD Group’s head office site in Bury.
JD Sports was advised by a team from the Manchester office of Addleshaw Goddard. The administrators were advised by a team from law firm TLT.