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JD Sports acquires 15% stake in South Korean retailer

Published 18 September 2017

JD Sports Fashion is set to enter into the South Korean market after it signed a joint venture agreement with Shoemarker that will see it invest in the Hot-T fascia brand.

As part of the deal, JD has taken an initial 15% stake in Hot-T, which is owned by Shoemarker for £5.5m.

JD has a call option to acquire a further 35% stake in Hot-T after the finalization of Hot-T accounts for the financial year ending 31 December 2017.

The company intends to exercise the option and re-brand the Hot-T stores as JD, after which the results and net assets of Hot-T will be consolidated into JD’s accounts. However, the existing management team will continue to run the business.

In addition, JD and SMK entered into put and call options as part of the joint venture agreement. The value of these options will be based on the fair value of Hot-T at the time of exercising, and have been capped below 25% of JD’s gross assets.

SMK operates two retail businesses, Shoemarker, a multi-branded footwear retailer in the sporting goods sector, which has 114 stores in South Korea, and Hot-T, a multi-branded footwear retailer in the athletic specialty sector, which has 23 stores in South Korea and its own website.

Hot-T posted revenue of KRW25.5bn (£17.2m) for the year until December 31, 2016, EBITDA of KRW3.0bn (£2.0m), gross assets of KRW42.6bn (£28.8m), operating profit (before exceptional items) of KRW0.6bn (£0.4m) and loss before tax after exceptional charges of KRW6.2bn (£4.2m).

JD executive chairman Peter Cowgill said: “We are delighted to be entering into this JV which gives JD the opportunity to enter a new market of over 50 million people with a proven operator. This JV will further strengthen JD’s global presence.”