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Multichannel retailing and international expansion help boost profits at JD Sports

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JD Sports says online and stores are both central to its strategy
JD Sports says online and stores are both central to its strategy
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Multichannel retailing and international expansion help boost profits at JD Sports

JD Sports today unveiled fast growth in revenues as it expands internationally. It said its multichannel approach that integrates stores and online to give customers the experience they want had paid off.

 

The multichannel retailer, ranked Top50 in IRUK Top500 research, said that revenues reached £1.8bn in the half-year to August 4, 35% ahead of the comparative period last year. Pre-tax profits of £121.9m were 19% up on last time.

 

The growth came as JD opened 18 stores in mainland Europe, and 21 in Asia Pacific including its first shops in South Korea and Singapore.

 

Executive chairman Peter Cowgill said: “This is another record result for our group demonstrating that our multi brand multichannel premium offer has resilient profitability in its core UK and Ireland market with capacity for continued growth across an increasing number of international markets.

 

"Against a backdrop of widely reported retail challenges in the UK, it is extremely reassuring that the profitability in the UK and Ireland sports fascias has been further enhanced. This reflects the value of the investments that we have made over a number of years in developing a dynamic multichannel proposition which marries the best of physical and digital retail enabling customers to interact with us where and when they want and through the channel of their choice.”

 

He said sales in the second half of the year at continued at similar levels and that it was well placed to meet market expectations for profits, at between £337m and £345m.

 

Here’s what else the retailer said about its multichannel strategy.

 

Stores remain important

Cowgill said that the company expects “physical retail to retain most of its current level of importance,” with stores “essential to brand awareness” and consumers still wanting to see, touch and try products. “Consequently,” he said, “we do not anticipate a material movement in the size of our store base in the UK and Ireland, although we continue to work with landlords on ensuring that our portfolio of leases has the maximum flexibility and the lowest committed cost possible.” He said that the business monitored store performance and profitability through a number of metrics. Refurbishing stores, retail theatre and visual merchandising all remained important, alongside digital integration.

 

Own brand and lack of discounting boosts profits

Improved profits, said Cowgill, came from better profit margins thanks to an “intensely rigorous” approach to ensuring stock sold through, and a “deliberate decision” not to go for short-term discounting. “We firmly believe that the longer term interests of both the group and our third party branded supplier partners are best served by JD further improving its reputation and customer experience with ongoing investment in store refurbishment, visual merchandising, retail theatre, customer service and digital integration. Margins on our own brand ranges have also benefitted in the period from favourable rates achieved on foreign exchange hedging contracts.”

 

Analyst reaction

Amy Higginbotham, retail analyst at data and analytics specialist GlobalData, said JD Sports had made “significant progress” with a strategy to expand further into Europe and beyond, given “increasingly limited opportunities for growth in the UK”.

 

She added: "JD Sports’ success can also be attributed to the ongoing athleisure boom as well as its ‘multichannel multibrand premium offer’ which includes product exclusives from brands such as Nike and Adidas. This, as well as its ability to remain relevant and engage with customers through the sponsorship of athletes like Anthony Joshua, sets it apart from emerging online competitors such as Gymshark, ASOS and boohoo.com. In addition, continued investment in its physical stores makes JD Sports more resilient to the challenges threatening the UK high street and having a significant impact on competitors like Mike Ashley’s Sports Direct.’’

 

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