CMA’s initial ruling proves death knell for JD Sports/Footasylum deal

In response to the CMA’s provisional findings on the proposed JD Sports/Footasylum merger;

Kate Ormrod, Lead Retail Analyst at GlobalData, a leading data and analytics company, offers her view:

“Today’s provisional findings from the CMA on the merger of JD Sports and Footasylum emphasise its tough stance on consolidation in the retail sector – all but putting the kibosh on the sportswear retailers’ deal.

“In response JD Sports’ executive chairman, Peter Cowgill, has lashed out at the CMA, stating its decision is ‘fundamentally flawed and demonstrates a complete misunderstanding of our market’. While clearly consumed with frustration, he does have a point with the CMA finding that global sports brands Nike and Adidas will not become more competitive in the coming years – undoubtedly incorrect given their focus on direct-to-consumer channels.

“It will evidently be a tall order to convince the CMA of the merger’s merits given its concerns about reduced discounting and range, and poorer service, with the impact keenly felt by the retailers’ younger shoppers, but JD Sports has committed to ploughing on. If it is unable to get the deal past the CMA it will only serve as a hiccup in its history and not the disaster it proved to be for Sainsbury’s and CEO Mike Coupe with its axed ASDA merger. Indeed other acquisition prospects are likely to arise for JD Sports, though outside of the UK.”

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