Burgeoning JD Sports cuts Aussie chain Glue loose
It’s the British sportswear titan that muscled in on the Aussie retail sector two years ago. Now it’s cutting loose the homegrown streetwear chain Glue as it focuses on rolling out its own brand.
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BRITISH athleisure interloper JD Sports has rid itself of the Glue street fashion chain as it focuses on rolling out its core brand nationwide.
The Australian arm of the UK retail heavyweight has sold the company that houses Glue back to its founder, local retail veteran Hilton Seskin.
At the same time, JD Sports has given Mr Seskin’s new retail vehicle housing Glue a $13 million loan to fund the chain, which is running at a loss in a tough retail environment.
The details are contained in an earnings update that shows JD Sports Australia has generated its first profit since Mr Seskin, who helped found the Rebel sports chain, brought the “King of Trainers” to our shores early in 2017.
It generated a net profit of $3.75 million from $214.9 million in sales for the year to February 2, accounts lodged with the corporate regulator show.
The result was a turnaround from a loss of $18.3 million the previous year as the chain absorbed major start-up costs.
JD Sports opened its first Australian store in Melbourne and now operates 19 outlets.
It is the latest foreign retailer to enjoy rapid success, joining Zara and Hennes & Maurtiz, which trades as H&M, in turning a profit in its second year of operations.
Japanese import Uniqlo took four years to post its maiden profit.
In coming to Australia, JD Sports took an 80 per cent stake in Mr Seskin’s Next Athleisure vehicle for $6.6 million.
Next Athleisure operates Glue, which sells youth brands including Stussy, Nike, Adidas and Tommy Hilfiger.
JD Sports Australia sold its stake in Next Athleisure last month to a new company called Next Athleisure Holdings, owned by Mr Seskin.
The sale price was not disclosed.
An update from JD Sports Fashion in the UK — the parent company of the Australian arm — said the retailer had “disposed of the legacy Glue retail business in Australia which was becoming an increasing distraction”.
“We do not believe that there will be any adverse impact on the development of JD in the country which is now well established with its own identity and operational infrastructure,” the update said.
JD Sports Australia’s accounts note that as part of the Next Athleisure sale, the British parent group provided Mr Seskin’s new company with a loan of $13 million drawn down to repay an overdraft facility provided by HSBC Bank.
The money has been lent at a 4 per cent interest rate.
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Mr Seskin continues to chair JD Sports Australia and has a 20 per cent stake in the company.
The retail veteran helped found Rebel from a single store in Sydney’s western suburbs in 1985.
The Glue chain was set up in 1999.
Mr Seskin’s other retail ventures include bringing UK fast-fashion chains Topshop and Topman here in 2010.
Topshop and Topman Australia fell into administration in 2017 with debts of $35 million.