As JD Sports reported an increase in sales for the second quarter of the year driven by surging revenues in the US and Europe, sales in the UK fell. Chief executive Régis Schultz tells Retail Week why JD’s underperformance in its domestic market is no cause for concern and why the retailer is a truly global business
In its latest trading update for the 13 weeks to August 3, 2024, JD Sports reported a 2.4% increase in group like-for-like sales and an 8.3% increase in organic sales.
Sales in North America were strongest, up by 5.7% on a like-for-like basis, while Europe sales were up by 3% and Asia-Pacific by 0.1%.
However, JD’s performance in its domestic market was less impressive. The UK was its softest-performing market during the period, with like-for-like sales in the quarter slumping by 0.8%.
Despite this, chief executive Régis Schultz says he feels good about the UK.
“I think the performance is good. We have positive organic growth in the UK,” he says.
“So, we feel good about our performance. We are gaining share, so we don’t feel bad. It’s just that it’s a reflection, which is as simple as that in the UK, that we are at maturity.
“There is no share gain, whereas in Europe and the US,we are expanding and gaining share.”
Here Schultz talks to Retail Week about why the UK’s performance doesn’t ring alarm bells for the retailer, future acquisitions and how a volatile market will shape its trading for the rest of the year.
UK vs the rest of the world
Compared with North America, Europe and Asia-Pacific, the UK is JD’s most mature market.
The retailer’s home country remains a very important region, but it is a very different game to the rest of the world, says Schultz.
“The UK is a more mature market for us,” he explains. “We have a high market share here, and in other countries we are gaining market share. So, it’s a very different game for us.
“We have always been clear that we want to continue to invest in the UK and, as you have seen in Westfield Stratford, we are doing bigger, better stores, and we continue to do that.
“But we know that the potential for growth in the UK is linked to the market. We don’t have a lot of room to gain market share. So that’s the main difference.”
Apparel sales in the UK account for a much higher percentage of the business compared with other regions and a late start to summer is never good for sales, adds Schultz.
“The other difference we have in the UK is that it has been a very late summer. Footwear has been doing well in line with the performance in other countries but the difference has been in apparel,” he says.
“Apparel is a bigger business for us in the UK than it is in the rest of the world. And it’s more seasonal. A late summer is never good for you because you get the sales when you are on Sale, which is not helping.”
It’s clear that Schultz does not see the UK’s performance as a setback, mainly because JD is a global business with plenty of opportunities to spread its branches elsewhere.
“It’s a strong trading performance. It shows the success of our global strategy,” he says.
“I think that we need to talk more for people to understand how much JD is global. [At the end of next year] the UK is going to be 25% of our turnover, Europe 30% and the US 45%. We are really a global business, and we leverage that.”
No such thing as too many acquisitions
The sportswear giant’s modus operandi of expanding into international territories has seen it acquire smaller, but well-established retailers, which automatically give JD local expertise and more stores.
It has done that successfully with the purchases of Poland-based footwear and clothing company Marketing Investment Group and Iberian Sports Retail Group to expand in Central, Eastern and Western Europe.
JD then recreated this with its £899m acquisition of sportswear brand Hibbett, which added “material scale and presence in the US through its 1,179 stores”.
Speaking about future acquisitions on JD’s radar, Schultz says the business is now comfortably set up in the US, which is the largest sportswear market in the world. But that won’t stop it from expanding into other areas.
“We believe that we now have the right set up in the US,” he says. ”We cover all the regions in all the formats. I don’t think there will be other significant acquisitions in the US.
“We always say, in terms of strategy in Europe, we still have growth potential in some countries, which could be fulfilled by small acquisitions to get more doors.
“And, after that, there is one region where we don’t operate yet, which is South America. So why not do something there? But we have nothing in plan, as we speak.”
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