Categories Earnings

Sportswear market: European firms setting new rules for the game

Sportswear companies in Europe, both retailers and manufacturers, have developed a unique penchant for the US market in recent years. Statistics show that German sneaker manufacturer Adidas has captured significant market share in the strongholds of its American counterpart Nike (NKE), and the company is climbing steadily to the top of the chart.

The demand for athletic shoes and clothing is flourishing persistently across the globe, owing mainly to the growing acceptance of casual apparels at workplaces and emerging trends like athleisure.

The question is whether customers would benefit from the new trend. As competition increases, the companies will revamp their product portfolio and prices will come down. Also, new apparel and sneaker models will hit the stores, giving shoppers more choice.

Meanwhile, there is also a downside to it – further strain on the margins of the local players who are already struggling to maintain their finances at sustainable levels.

After conquering the U.K., sportswear retailer JD Sports Fashion is all set to tap into America’s fast-growing sportswear market. The deal inked by The Finish Line (FINL) to be acquired by JD Sports will aid the leading brands to expand their worldwide presence, especially Adidas and Nike who compete with each other from across the continents.

Considering the thriving sportswear market in the U.S., it would be JD Sports’ most ambitious expansion initiative in the global sportswear retail market. Investors welcomed the deal overwhelmingly, and Finish Line’s shares surged more than 30% after the news broke on Monday.

Sportswear retailer JD Sports Fashion is all set to tap into America’s fast-growing sportswear market

JD Sports will be acquiring Finish Line, a leading retailer of sports sneakers and branded sneakers in the U.S., for $558 million in cash. The transaction, to be funded through fresh borrowings, is expected to add to JD Sports’ earnings in the current fiscal year. The company will also reaffirm its status as a global player in the sector, after venturing without a hitch into France, South Korea, and Spain.

Finish Line recorded lower comparable store sales in their recently ended fourth quarter. However, the cost-cutting measures adopted by the management and effective inventory management helped it raise the top-line moderately, in comparison with the year-ago quarter.

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