JD Sports buys 8% stake in Footasylum
Written by Hannah McGrath
Shares in Footasylum have soared after sportswear giant JD Sports bought a 8.3 per cent stake in the company, with a potential to increase its holding to 29.9 per cent.
JD Sports said the purchase of equity in rival sports retailer Footasylum was made for “investment purposes” and that it was not intending to make an offer to acquire the company.
Shares in Footasylum jumped by more than 150 per cent on news of the share purchase. The company listed in October 2017 and has since seen its share price slump from £1.64 per share to 29p last week.
The High Street footwear retailer has battled tough trading conditions in recent months.
It issued a second profit warning in January, following heavy discounting over the Christmas period, and announced it was cutting costs despite a 14 per cent rise in total revenue to £102.3 million for the 18 weeks running up to December.
Announcing results for the Christmas period in January, Barry Bown, Footasylum’s executive chairman, said that “the short-term outlook is undeniably challenging, and we continue to maintain our focus on cash, working capital and inventory management, as well as reducing costs across our operations”.
At the start of September last year, Footasylum warned of full-year adjusted earnings coming in at less than half of the previous year’s £12.5 million figure, due to lower gross margin and higher costs from investment in operations.