JD Sports has snapped up a stake in South Korean retailer Hot-T as it presses ahead with its international expansion push.
The sportswear retailer has penned a joint venture with Hot-T owner Shoemarker Inc (SMK) to acquire an initial 15% in the business. JD said the deal is worth approximately £5.5m
As part of the joint venture agreement, JD has an option to buy a further 35% share of Hot-T following the finalisation of the chain’s accounts for the year ending December 31, 2017.
JD said it was its “current intention to exercise this option and to re-fascia the Hot-T stores as JD.”
Should JD up its stake to 50%, Hot-T will continue to be run by its existing management team, while its results and assets would be consolidated into JD’s financial accounts.
SMK operates two retail chains, Shoemarker and Hot-T – a multi-branded footwear business with 23 stores in South Korea and an ecommerce platform.
Hot-T raked in sales of KRW 25.5bn (£17.2m) during the year ending December 31, 2016, with a store EBITDA of KRW 3bn (£2m).
It posted an operating profit of KRW 600m (£400,000) but after exceptional charges – principally relating to one off stock write offs – were accounted for, Hot-T suffered a pre-tax loss of KRW 6.2bn (£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.”