Deloitte has been called in as administrators to Go Outdoors, and has sold the high street camping clothing and supplies company in a £56.5m pre-pack deal to owners JD Sports Fashion
JD Sports said it had appointed Michael Magnay and Daniel Butters, partners with Deloitte, as part of moves to restructure the Go Outdoors business in the face of the challenges caused by the spread of Covid-19.
In a statement, the company said: ‘Following the onset of Covid-19, the future viability of the business has become materially uncertain with the enforced closure of Go's stores on 23 March 2020 bringing into sharper focus the operating costs of the business.
‘Specifically, 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.’
JD Sports said it had considered a number of strategic options for Go, which included appointing Deloitte in May to market the business for a potential sale.
However, it has now decided that, if fundamentally restructured, Go has a future in the group. Consequently, the group, via its newly incorporated subsidiary JD Newco 1 Ltd, has re-acquired the business and substantially all of the assets of Go from its administrators for consideration of £56.5m which returns to the group as partial repayment against its historic indebtedness.
JD Sports said the proposal was reviewed and cleared in advance by the independent Pre Pack Pool.
Michael Magnay, Deloitte partner and joint administrator, said: ‘Like many high street retailers, Go Outdoors has been seeking to address a number of underlying business challenges in the current UK retail environment, which have been exacerbated by the impact of Covid-19.
‘This successful sale will provide Go Outdoors with an opportunity to restructure its business to secure its future for the long term.’
At the point of administration, Go operated 67 standalone stores and a trading website.
JD Sports said it has taken an initial 12 month licence such that it will continue to occupy all of the Go stores and intends to retain the majority of Go's retail estate and preserve as many jobs as possible, ‘subject to realism and flexibility in the future leases’.
The company statement said: ‘It is also the group's intention to honour the principal historic liabilities of the Go business including branded stock suppliers, HMRC liabilities on taxation, customer returns, and gift cards. Further, all pre-existing Go employees will transfer across to the new business with their previous terms and conditions of employment preserved.’
Peter Cowgill, JD Sports executive chairman, said: ‘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. Most importantly, we are pleased that it will protect the maximum number of jobs possible.
‘We look forward to having positive conversations with landlords and agreeing new flexible lease contracts which reflect the widely reported challenges of reduced consumer footfall.’
There have been a number of high profile retail administrations during the current pandemic, with Cath Kidson, Laura Ashley and Debenhams all shutting up shop.