(Reuters) – JD Sports <JD.L> on Tuesday appointed Deloitte as administrator for its loss-making outdoor clothing chain as it bought back assets of the unit in a pre-pack administration deal.
Go Outdoors, which JD first bought for 112 million pounds four years ago, has struggled with significant losses as sales declined at its 67 stores, and JD had been exploring options for the division while the coronavirus lockdown mounted further pressure.
“As a consequence of COVID-19, Go Outdoors was no longer viable as previously structured and would have absorbed capital at an unsustainable rate for the foreseeable future,” Executive Chairman Peter Cowgill said.
The London-listed sports fashion retailer said it re-acquired the business and all its assets from Deloitte for 56.5 million pounds, and will begin a restructuring of the unit.
The company will occupy all Go stores initially for a year and retain as many assets and employees as possible while it weighs future leases and options.
A pre-pack administration enables a company to sell itself or its assets before it appoints administrators who take over the running of the business to protect creditors. A similar approach was taken by outsourcer Interserve last year.
JD also said that the money it paid to buy back Go will come back into the group as partial repayment against historical debt and it has stopped funding Go in its current form.
(Reporting by Pushkala Aripaka in Bengaluru; Editing by Maju Samuel)