Go Outdoors, the dusty retailer of tents and fishing tackle, has emerged from the ashes as a phoenix, shiny, clipped and nearly new. JD Sports Fashion, under blunt chairman Peter Cowgill, put the company into a prepack administration on Tuesday. He pulled it out of the fire within hours, shorn of its contracted obligations to landlords.
Go Outdoors is one of many limping chain stores, from Monsoon to Quiz, that have been transformed by administrators into flame-winged fledglings and returned to their previous owners sans leaseholder liabilities. In the case of Go Outdoors, a £56.5m price tag was attached to the transaction, although no cash will change hands.
JD Sports is reserving its brutality for landlords. It is tearing up Go Outdoors’ leases. Some of them included upward-only, inflation-plus annual rent increases and stretched well into the next decade. They did look outmoded and unsustainable.
JD says Covid-19 has brought operating costs into “sharper focus”, specifically property leases. About time. Upward only rent reviews were already being eased out in 2016 when JD bought Go Outdoors for £116m.
It is a wonder that JD Sports agreed at the time. Perhaps Mr Cowgill was too busy expanding his empire to look at the small print. He has been buying up chunks of the high street almost as fast as rival Mike Ashley. Both have been like shopaholics hoovering up trinkets just because they are cheap. They are not alone. The most recent would-be emperor of retailing is Boohoo, which has snapped up online fashion brands of Karen Millen, and more recently Oasis and Warehouse, from administration. All three brands were part of the ultimately doomed Icelandic empire of Baugur which collapsed into administration a decade ago.
In the past couple of years, JD has bought Finish Line in the US, picked up the online side of Pretty Green, the ailing brand created by Liam Gallagher, and shoe emporium Footasylum, to name but a few. Go Outdoors, as a part of a small outdoor division that includes Blacks Leisure and Millets, earned sub-5 per cent of JD’s group revenues.
JD may say laying Go Outdoors in the fire is all part of the cycle of life. It is a savage process, though, with landlords being put to the torch.
Not many FTSE chief executives stick around for a decade. Dean Finch has done his time at bus operator National Express and is packing his bags for housebuilder Persimmon. He has been well-paid for his service, though nowhere near as handsomely as the man he is replacing. Mr Finch, aged 53, says he needs to work and reckons he has at least one more big job in him. Outgoing chief executive Dave Jenkinson, 52, has no such need, thanks to a £40m bonus from the Persimmon incentive scheme that cost predecessor Jeff Fairburn his job.
Mr Finch ground out a steady share price rise at National Express, at least until the crisis came along. He held off bidding too high for UK rail contracts, the error that has dogged rivals. When Trenitalia wanted not only to buy out the last remaining National Express rail franchise but offered to pay good money for it, Mr Finch knew he had a good deal on his hands and accepted.
Persimmon’s reputation needs rebuilding. The bonus scandal — Mr Fairburn was extravagantly rewarded by an uncapped incentive scheme — was emblematic of a time when shareholders and executives made a mint at the expense of homeowners. Mr Jenkinson announced his departure after little more than a year in the role, following a damning report into the quality of the group’s homes.
But the balance sheet is sound and even with a recession and housing market slowdown, it looks an easier job than National Express. Covid-19 has almost entirely undone Mr Finch’s work over the decade building up the group’s share price. It will be simpler to persuade people to buy houses than assure them that public transport is safe.
From Persimmon’s point of view, it is easy to see the appeal of Mr Finch as a safe pair of hands, notwithstanding his lack of experience in the sector. His job at Persimmon will be to convince customers he is putting quality above the bottom line. He must also satisfy shareholders he won’t sacrifice too much profitability. They have become accustomed to stellar returns, rather than National Express’s steady progress.
Naked Wines is, well, naked about how the current crisis has helped it in its mission to connect drinkers and winemakers. Lockdown has been a major catalyst for growth, the company says, like putting together yeast, sugar and grape juice. The shares are up 53 per cent in a year. Best not to let the mix go to your head, though.
JD Sports Fashion: Kate.email@example.com
Get alerts on Retail sector when a new story is published