JD Sports has delivered another gangbuster set of results – but how can the retailer maintain momentum in the UK and overseas?
The sports fashion retailer’s pre-tax profits and revenue skyrocketed 33% and 41% respectively in its half year to July 29 and it said full-year profits would be at the upper end of market expectations.
Retail Week looks at how it keeps beating the market and how it plans to keep up the pace.
JD Sports executive chairman Peter Cowgill is adamant that its success is down to the products it stocks and the relationships it has built up with suppliers to get them.
“We’re the first choice destination for branded outwear, mens, womens and kids”
Peter Cowgill, JD Sports
“We continue to strengthen our branded line-up all the time. Our association with all of the global brands is second to none and they recognise that we are providing the leading consumer experience for their brands,” says Cowgill.
Whilst many retailers are focused on expanding their own-brand offer to boost margins and weather the storm that currency fluctuations has had on sourcing costs, JD Sports has doubled down on branded product.
It’s a strategy that Cowgill says has paid dividends.
“We’re the first choice destination for branded outwear, mens, womens and kids,” he states.
Don’t second guess the customer
Compared to its leap in profits and sales, JD Sports rise in like-for-likes are comparatively subdued, up 3% for the UK and Ireland and 7% for mainland Europe. This suggests that growth has been driven by store expansion.
“We do not know what we’re going to take tomorrow and I would challenge every single retailer on that – you can only aim to perform at your optimum”
Is this how JD Sports’ future growth will be driven? Or can it get like-for-likes motoring?
Cowgill says that trying to anticipate how or where a shopper will want to shop from one day to the next is a fool’s errand.
“The truth is there isn’t one retailer on this planet who can tell you what their like-for-like figures are going to be tomorrow and the amount of bullshit that is spoken about future like-for-like sales is staggering,” he says.
“We do not know what we’re going to take tomorrow and I would challenge every single retailer on that – you can only aim to perform at your optimum.”
JD Sports is upping the ante on its international expansion.
The sportswear retailer has opened a net 23 new stores in mainland Europe over the last six months and plans to open a shop a week on the Continent for the remainder of its financial year.
The business also set up shop in Australia in its first half and expanded its store network in Asia.
Not content with this pace of expansion, JD Sports has confirmed it will open stores in new countries over the next 12 months.
But why is the retailer going such great guns overseas?
Cowgill says JD Sports’ reputation precedes it globally, and that is inundated with offers to expand.
“JD Sports is perceived internationally as the iconic retailer in this sector of the market,” he says.
“It sounds arrogant but it’s not meant to be.
“The reason I know that is the number of partners that wish to engage in every corner of the world, we just can’t accommodate it.
“We have to select where we develop, if we partner in more distant territories, who we partner with, and we’re fully engaged on that.”
JD Sports is hellbent on making itself the go-to for premium sportswear products in the UK and overseas.
Hiking up the outdoors division
The group’s outdoors division posted an operating profit of £100,000 in its latest results – the first time it has delivered a profit at the interim mark.
“We’re pretty good housekeepers”
This was driven by the recently acquired Go Outdoors, although Blacks and Millets also reported narrowing losses.
“Blacks and Millets four years ago was a very distressed business that we took over so I’m pleased that we’ve been able to make progress with that,” says Cowgill.
The retail boss was also confident that JD Sports’ outdoors division, which has previously posted consecutive years of losses, was finally on the ascent.
“We’re pretty good housekeepers,” says Cowgill.
“We micro-analyse all parts of the business and apply the same rules that we do to the sports business, it’s just a different clientele. So we’ll increasingly turn the flame up on those analytics in our outdoors division.”
Safe pair of hands
“We provide what they would consider to be an exciting but safe home for those brands”
Whilst this turn upmarket could mean increased competition for JD Sports, Cowgill is unfazed about the strategic shifts of its retail rival.
“You’d be foolish for it not to be on the radar but we can’t excessively concern ourselves with what others are doing,” says Cowgill.
However, JD Sports’ relationship with its suppliers is hard to replicate, says Cowgill.
“We provide what they would consider to be an exciting but safe home for those brands,” he says.
“We treat them well and fairly and do genuinely see them as partners for mutual development.”
The star performer in the sports sector has delivered its latest results through a trickle-down technique: if your suppliers are happy, the stores stand out, and if that happens the shoppers will continue to flock there.