JD Sports Fashion has made no secret of its ambition to win in the North American market and has, to-date, undertaken some impressive expansion activity. This includes the acquisitions of mall staples Finish Line and Shoe Palace, as well as via the expansion of its own JD Sports fascia. These initiatives have given the company a very firm toehold in the market.
The addition of Hibbett to the JD family will provide a big boost to the US business and gives JD Sports a presence in a lot of markets where it is currently underrepresented. Although Hibbett has a very strong sneaker business, the acquisition will also allow JD to play to its strengths in the sports fashion and athletic wear arenas.
While Hibbett has had nowhere near the growth of Dick’s, it has nevertheless been a solid performer over recent years and has carved out a clear point of difference in serving smaller and mid-sized towns — places where competition from other sporting retailers is relatively thin on the ground. With only around a quarter of stores within 10 miles of competitors, Hibbett is a destination for sporting goods in the markets it serves.
Nevertheless, competition is heating up as more sales are made online and players like Academy Sports + Outdoors look to expand. In my view, this makes the timing of the acquisition by JD Sports favorable as the group will be able to use its superior buying power to drive up margins. Under JD Sports, there is also more likelihood of investment in Hibbett stores and the proposition. All in all, this gives Hibbett a more defensible future.
While JD will immediately benefit from the bigger scale, it will have some work to do in integrating Hibbett if it is to get the full benefit from the acquisition. It will also have a balancing act in modernizing the operation while, at the same time, respecting Hibbett’s place in local communities.
None of this represents a major challenge to Dick’s, which remains the preeminent retailer of sporting goods and has a much wider proposition that includes deep expertise in sports equipment. However, it does increase the competitive temperature in the sports and sneaker market.
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