IRISH-OWNED CHAMPION Sports is set to be acquired by quoted British retailer JD Sports Fashion for €19.6 million in a move that looks set to secure the future of its 23 shops and 600 full and part-time jobs.
This involves an upfront sum of €17.1 million to repay debt provided by Anglo Irish Bank at the time of the acquisition of Champion in October 2006 by PCP One and €2.5 million in leasing commitments that will be paid by the business over time.
It is understood Champion was acquired by PCP One for €40 million, and not €60 million as was widely reported at the time. Anglo is believed to have provided over €30 million in debt finance and will take a haircut on its loans.
But the bank is believed to be happy with the sum, given the difficult economic backdrop for retailers here, and believes it would have secured far less had it enforced its guarantees and forced the company into receivership.
Champion Sports was owned by a consortium that comprised developers Bernard McNamara, Jerry O’Reilly, Terry Sweeney, David Courtney and Bernard Doyle. Financier Bernard Somers was its chairman. They have seen their equity in the business, believed to be €5–€10 million, wiped out.
At its peak, Champion had annual sales of about €70 million and was expanding aggressively. But the recession impacted the business significantly. In 2009, it made an operating loss of €1.8 million on turnover of €54 million. Its loss before tax was €4.9 million and it had gross assets of €36.2 million. No figures are available for 2010 trading, but it is believed sales were flat, although the company returned to the black. A new store also opened in Waterford.
While it is a major player in sports fashion in Britain, JD has just eight stores in the Republic.
The deal will need the approval of the Competition Authority.
Champion’s chief executive John Quinn will remain with the business and it is understood that JD has plans to open 10 new outlets over the next three to five years. The company is expected to retain its dual branding here.
This deal is a boost to the beleaguered retail sector. Retail Excellence predicted yesterday that 400 retail shops could close this year.
JD said Champion’s performance was “adversely impacted” by the recession and an “inflexible fixed property cost base, which we intend to continue to address”.
It expects the Champion acquisition will be “earnings enhancing in future years after investment in the store portfolio and the realisation of operational synergies”.
