Jun 24, 2020
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JD Sports vows to preserve Go Outdoors jobs, revise upwards-only rent deals

Jun 24, 2020

News on Tuesday that previous owner JD Sports had bought back Go Outdoors in a £56.5 million pre-pack administration deal, was accompanied by the sports retail giant saying that it would work to preserve as many of the 2,400 jobs at the chain as it can.

Go Outdoors should now have a more viable future

The retailer, which had originally bought the business only four years earlier for more than £100 million, put it into administration this week and bought it back in the pre-pack deal on Tuesday.

It blamed high store rents and the company no longer being viable in its previous form following three months of coronavirus-linked closures for the administration filing. But it has now said it will “protect the maximum number of jobs possible”.

So many other business failures at present have been linked to high rents that mean many failed companies were struggling even before the lockdown. 

In a statement, JD Sports said: “The terms of the property leases in Go were extremely inflexible with the stores having an average remaining period to lease expiry of approximately 10 years with upwards-only rent reviews, many of which are fixed at rates above inflation, regardless of the market rent in the location.

“Having investigated all available options for the business, we firmly believe that this restructuring will provide Go Outdoors with a platform from which it can progress whilst remaining a member of the group.”

It also said it had considered a sale, but decided that a restructure under the JD Sports umbrella was the best option.

It’s unclear at present how many of the 67 standalone stores will continue to operate long term. But in the short term, it will be largely business as usual (as far as that's possible in the unusual circumstances of the present day) for many of the shops and its website. For instance, JD Sports intends to honour Go Outdoors gift cards and returns and has also taken on liabilities to suppliers and HM Revenue and Customs.

The retailer said it “has taken an initial 12-month licence such that it will continue to occupy all of the Go stores and, subject to realism and flexibility in the future leases, it is the group’s intention to retain the majority of Go’s retail estate.”

The administrator said the sale was the best possible option to give Go Outdoors the chance to restructure and build a business that can continue into the future.

But it's clear that cheaper stores costs alone won’t do. Go Outdoors will need to boost its online operations in order to secure a viable future. The company had previously been focused mainly on its physical shops in an age when online has been becoming more important every year. And the impact of the pandemic has boosted the importance of online operations even further.

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