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The UK Competition and Markets Authority (CMA) has discovered after an inquiry that the takeover of Footasylum by JD Sports could lead to a substantial reduction in competition and a worse deal for Footasylum’s customers, and therefore, JD Sports selling Footasylum is the only way to address its competition concerns and protect consumers.
Footasylum was purchased by JD Sports in a deal announced in April 2019. Both companies sell sports-related fashion, including clothing and footwear, in stores around the UK and online, through their respective apps and websites.
CMA will oversee the sale and approve the purchaser to ensure that Footasylum will be run as a fully independent competitor, CMA said in a press release.
The UK Competition and Markets Authority (CMA) has discovered after an inquiry that the takeover of Footasylum by JD Sports could lead to a substantial reduction in competition and a worse deal for Footasylum’s customers, and therefore, JD Sports selling Footasylum is the only way to address its competition concerns and protect consumers.
CMA found that JD Sports is by far and away the closest alternative for shoppers at Footasylum. The CMA expects this will continue to be the case even after taking into account the continued growth in online shopping, including on the websites and apps of brands such as Nike and adidas.
Fifty per cent of online shoppers surveyed by CMA said they would go to JD Sports if they were unable to shop at Footasylum for clothing, while 43 per cent said they would the make the switch if they could no longer buy footwear from Footasylum. These figures were substantially higher than for any other retailer. Another CMA survey of in-store shoppers showed similar results.
CMA also found that despite increased competition from firms like Nike and adidas and the impact of COVID-19, Footasylum would remain in good financial health. With a total 2020-21 revenue of £232 million, the retailer reported underlying profits (EBITDA) of £29.3 million for the fiscal, up from £25.5 million in 2019-20 and £2 million in 2018-19.
The merger means that Footasylum would no longer face competition from JD Sports so customers would have fewer options and could face higher prices, fewer discounts, and less choice of products in-store, CMA said.
Fibre2Fashion News Desk (DS)
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