JD Sports follows the trend into beauty with stake in Hairburst

Published On: September 28, 2021Categories: Stocks & Shares2.3 min read

Fashion and clothing brands developing a powerful online presence all seem to have one thing in common – they also own beauty product ranges. It’s clearly a trend the athleisure giants, who have developed a strong competitive advantage in recent years thanks to the success of their online offering to complement a traditional physical retail presence, have spotted. JD Sports is to acquire a significant minority stake in Hairburst, an online-first beauty and hair products brand founded in 2014.

The Hut Group (THG), the Manchester-based rising star of the UK’s e-commerce sector, has set the standard in recent years when it comes to developing online-only brands. It has built a stable of online-only and online-first beauty brands, some developed in-house and others acquired as the company has grown. Last week THG announced it is to spin out its beauty and skincare business as an independent listed company.

Online fast fashion groups Boohoo and Asos have diversified into beauty brands in recent years. And Next, a high street favourite that has, like JD Sports, also been successful in creating a successful online business to complement its physical presence, has done well from its own brand beauty products as well as curated collections of third-party brands.

JD Sports has been eyeing greater diversification from its core athleisure products and brand as the company’s management pursues continued growth. Last year a move for Debenhams, the well-established but some would say ‘tired’ department store brand, was looked at closely after the company went into administration. JD Sports shareholders pushed back against the interest, concerned that taking on an ailing department store would hinder not help growth.

What Debenhams did, however, have going for it and why Boohoo eventually swooped in to pick the company up, was that it was the UK’s biggest online beauty products retailer. Boohoo was after the brand name and website and had no interest in the store-based department store model Debenhams is best known for.

Now JD Sports has its entry into the beauty vertical with an undisclosed stake in 2014-founded Hairburst, which sells shampoos, styling products and vitamins. As well as selling online, its campaigns helped along by a 1.5 million-strong following on social media, Hairburst’s product lines are also stocked by physical retail chains Superdrug, Boots and Sephora.

It is being reported that the JD Sports investment will help fund Hairburst in making a number of acquisitions designed to speed up its own growth.

JD Sports executive chairman Peter Cowgill commented on the deal:

“We are pleased to have made this initial acquisition in the beauty sector and have been impressed by the capabilities of the management team, who have a strong identity and connection with millennials and Gen Z consumers.”

Hairburst co-founder James Hill added:

 “With our ability to create amazing products and market through social media, supplemented by JD’s consumer connection, financial power and global scale, we see great potential to build the Hairburst brand and acquire other brands within the sector. “

About the Author: Jonathan Adams

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