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JD Sports says 47% sales boost shows how much customers like its ‘elevated multichannel’ strategy

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JD Sports says 47% sales boost shows positive response to its ‘elevated multichannel’ strategy

JD Sports today said its customers had responded to its multichannel strategy with enthusiasm over the first half of its financial year, as it reported a strong boost to revenue and pre-tax profits.

 

The sports fashion business, ranked a Leading retailer in IRUK Top500 research, today reported pre-tax revenues of £2.7bn in the six months to August 3. That’s 47% up on the same time last year. In the UK and Ireland market, like-for-like sales were up by 10%. Profits before tax and exceptional items were 30% ahead at £158.6m. After one-off costs of £28.7m, pre-tax profits came in at £129.9m, 6.6% up from £121.9m last time.

 

JD Sports executive chairman Peter Cowgill said: “Against a backdrop of widely reported retail challenges in the UK, it is extremely encouraging that JD has delivered like-for-like sales growth of more than 10% with an improved conversion reflecting consumers’ increasingly positive reaction to our elevated multichannel proposition where a unique and constantly evolving sports and fashion premium brand offer is presented in a vibrant retail theatre with innovative digital technology. JD also continues to gain momentum in Europe with a further double-digit increase in total like-for-like sales and a net increase of 23 stores in the period.”

 

But it said full-year profits would be at the mid-point of market expectations – between £402m and £424m – rather than at the top end, as a result of its transition to new IFRS 16 accounting standards.

 

Multichannel strategy

JD said that its “continual investment” in its stores, digital platforms and creative marketing helped it to deepen its relationship with its customers, and that its “elevated multichannel proposition” was also attracting premium brands to its stores. It has invested directly in those brands through acquisitions including the £1.5m purchase of the Pretty Green brand, ranked Top500 in IRUK Top500 research, from its administrators. That business now trades through one flagship store in Manchester, a transactional website and wholesale.

 

In April JD bought IRUK Top100 business Footasylum for £86m and took on debt of £7.8m. The business is being operated separately until a Competition and Markets Authority enquiry is completed. JD says that the Footasylum range and older customer demographic will complement its own business, while it brings both a range of new own-label brands to its business and has experience in selling wholesale from which JD can learn.

 

Store estate

During the year the retailer opened a net 23 JD stores in mainland Europe and seven in the Asia Pacific region, taking its total sports fashion store numbers to 2,218, of which 768 are JD and Size stores. It also has 252 ‘outdoor’ stores operating under the Go Outdoors, Blacks and Millets brands. It said that it was “very aware” of the financial benefit that other retailers had got when they downsized their estates and that “whilst we have no plans to fundamentally alter the size of the JD store network in the UK at this time, we continue to seek fairness and flexibility in the terms of our offer.” The comments reflect the fact that a number of high street retailers – from Mothercare and New Look to the Arcadia Group businesses – have used CVAs (company voluntary agreements) to reduce the size of their store networks, and to reduce rents on individual stores.

 

Operations and logistics

Over the half-year JD restructured the fulfilment model for its Go Outdoors business, centralising store replenishment - which previously saw suppliers deliver direct to each store – and online fulfilment in a new third-party warehouse in Cheshire. While that had initially resulted in availability and replenishment issues, those were now largely resolved and the business reported like-for-like sales growth in July.

 

“We maintain our belief that this new flexible supply chain model, where we have greater control over the replenishment, will bring longer term financial benefits to Go Outdoors,” said today’s JD Sports half-year statement. “Furthermore, we remain convinced that greater integration of the Outdoor businesses, with Blacks and Go Outdoors having access to one pool of stock with common merchandising systems will also provide the most robust and effective platform for the long term development of our Outdoor businesses. However, we believe it is prudent to allow time for operations in the new facility to further stabilise and so we have delayed the transfer of the Blacks stocks from Kingsway to Middlewich until early 2020.

 

JD Sports has also brought forward plans for a European warehouse in the light of Brexit and its potential impact on a stock management system that is currently “highly integrated” between the UK and Europe. It is working with logistics partners to take 80,000 sq ft of space in Belgium, set to be available for use early next year and will be used to process footwear.

 

Image: Screenshot of JDSports.co.uk

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