UK sports company dumps loss-making Canterbury brand
Aug. 24 (BusinessDesk) - British sports retailer JD Sports is selling the iconic but loss-making Canterbury rugby clothing brand to its majority shareholder Pentland, after an unsuccessful three-year attempt to build the brand in the European and US markets.
The sale to specialist sports footwear company Pentland is for 22.7 million UK pounds, all but one pound of which reflects the value of Canterbury's debt.
JD Sports paid 6.5 million pounds for the assets of Canterbury in 2009, saying it intended to consolidate its hold on rugbywear, but has concluded while there are brand-building opportunities, Canterbury is entrenched in the Australasian markets where JD Sports has little presence.
As a related party transaction, the purchase will require shareholder approvals at a meeting to be held on Sept. 13.
The deal involves Pentland paying 1 pound for the assets of Canterbury, with the remainder to purchase the debt of the brand, which has gross assets which JD Sports says are valued at 32.6 million pounds.
Canterbury currently supplies kit to the South Africa and Scotland teams, and has signed a four-year supply deal with the Rugby Football Union for its needs, but other national teams use other suppliers. The All Blacks, for example, use adidas kit.
The company made a pre-tax loss of 1.1 million pounds in the year to Jan. 28.
Since 2009, JB Sports built Canterbury's global network into US and European markets, but has since decided to close both.
While the board "continues to believe that Canterbury is a significant brand development opportunity", it also says "the board does not believe that the Canterbury brand will be a key component of the group's future retail proposition."
"A substantial element of Canterbury's revenue and earnings are located in New Zealand and Australia, territories where the group has limited operations and which are significantly distant from the core retail focus of the group in the UK and continental Europe."