Acquired substantially all the assets of Go Outdoors in a pre-pack from the administrators Post market close last night, JD Sports announced that administrators have been appointed for Go Outdoors and the assets bought back via a pre-pack. Having looked at options including a sale process, the Group, via a newly incorporated subsidiary has subsequently re-acquired the business and substantially all the assets of Go Outdoors from the administrators for £56.5m. The £56.5m returns to the Group (as the secured creditor) as partial repayment against Go’s historic indebtedness. At the point of administration, Go Outdoors had 67 stores. The Group has taken an initial 12-month licence so it will occupy all the stores and intends to retain the majority. We believe the number retained is likely to depend on how demand recovers post COVID and whether lower/more flexible rents can be agreed with landlords. Go Outdoors’ average lease length was 10 years with upward only rent reviews, many of which were fixed at above inflation. The Group intends to honour the principal historic liabilities of the Go business including branded stock suppliers, HMRC liabilities on taxation, customer returns, and gift cards. All staff will be transferred across to the new business with their previous terms and conditions of employment preserved. Next news: Nike Q4 earnings on 25 June & JD Sports FY20 results on 7 July As highlighted in our note Go Outdoors - Considering options earlier this week, JD Sports has struggled to build a profitable Outdoor business ever since it acquired Black/Millets from administration back in 2012. It hoped the Go Outdoors acquisition at the end of FY17 would help with its added scale. It did not and we are not surprised by management’s actions. After 4 years of deteriorating performance, our current FY21E forecast assumes an EBIT loss of £24.5m for the Outdoor division (incl. Blacks/Millets/Tiso/Ultimate Outdoors). It appears to us that Go Outdoors was unlikely to survive in its current form, even without COVID-19, given the inflexibility of the lease structure and a declining footfall profile with the shift to online. The next news from JD Sports is its FY20 results to end-January, which pre-date the COVID-19 impact. Focus will be on any update on current trading. Virtually all Group stores have reopened. Anecdotal evidence from other retailers suggest the loungewear/athleisure category has held up well during lockdown and been in demand post reopening. We believe JD Sports is well positioned with its market-leading, multi-channel proposition to quickly resume its historic double-digit growth trajectory. We reiterate our BUY.