After several years of staying close to home, it’s no surprise that, even with the cost-of-living crisis, more than 60% of Brits are planning an overseas holiday this year – up by 10% on last year, according to research by American Express.
When it comes to UK retailers, however, Retail Week’s ranking of international sales shows that economic uncertainty has resulted in a delay on many of their departure boards.
According to Retail Week research director Lisa Byfield-Green, Tesco’s international performance best demonstrates the challenges UK retailers have faced and the sacrifices required to operate a growing and profitable UK operation.
“Tesco’s small international sales volume of £4.2bn [for the year to February 2023] is in sharp contrast to 2011, when it generated £21.2bn internationally,” she says.
“Even at the beginning of its turnaround three years ago, the retailer generated almost 20% of revenues overseas. It disposed of international operations in South Korea in 2015 and Turkey in 2016, sold operations in Thailand and Malaysia in 2020, and exited the market in Poland in 2021.
“That leaves Tesco with just three markets in Central Europe (Hungary, Czech Republic and Slovakia).
“As a much leaner, more focused business with a stronger balance sheet, Tesco is now able to redefine value and loyalty, and win back shoppers in its core domestic market in the UK and Ireland.”
But that’s not the story for all UK-domiciled retailers – particularly those in sports and athleisure.
JD Sports sits at the top of the table, clocking up £5bn of growth in international markets in FY2021/22, head and shoulders ahead of Currys in second place with £4.7bn.
Crucially, while the other retailers in the top three are recording broadly flat overseas sales, JD has recorded the biggest leap of any retailer on the table in monetary terms, up £1.3bn on the previous year.
At the end of last year, the sports and leisurewear group had almost 3,400 stores across 36 countries – not including its joint ventures – and more than 2,600 of those are outside the UK.
And JD Sports still has an eye on serious growth outside its home turf, announcing in February that it would open 350 stores a year globally over the next five years – racking up 1,750 new store openings by 2028.
A JD Sports spokesperson told Retail Week: “Our premium fascias across the world deliver exceptional experiences in store and online, and a product and brand mix that is premium, on-trend and continually evolving.
“Our focus on the consumer is also underpinned by the financial resources to deliver further expansion in underpenetrated and strategically important markets, and our positioning as the partner of choice for many international brands who recognise JD as the natural home for their latest ranges and styles.”
The group has made strides with acquisitions and store openings in Germany, France, Greece and Italy in recent years, but it’s the US where it sees the biggest opportunity.
Around half of JD’s opening target will come from converting Finish Line – a 525-store sportswear chain it bought in 2018 – into JD Sports stores.
It has also snapped up US chains Shoe Palace and DTLR in the past few years, adding to its armoury in the country.
In percentage terms, fellow sportswear retailer Gymshark has seen the highest growth, up 68% to more than £350m, with its growing US presence now accounting for 45% of total revenue.
Meanwhile, Sports Direct owner Frasers Group grew sales 22.5% to almost £1bn.
“Sports and leisure retailers have the advantage of strong international brand recognition and highly desirable products,” says Byfield-Green.
“Brands such as Adidas and Nike have successfully developed a direct-to-consumer model, supported by experiential flagship openings in capital cities across the world. They have less work to do in terms of brand awareness than an unknown retailer.”
Several mainstream fashion retailers have also seen their international sales climb. Next packed on 31% growth, the equivalent of £174m to take a position in the top 10, while Clarks added £87m to hit £592m and Asos grew by 10% to £2.3bn.
Primark, however, suffered a drop – down 3% to £3.3bn – which was down to weaker than expected trading in Germany.
At the end of last year, the fast fashion brand had 217 stores outside the UK, including 56 in Spain, and it is charging ahead with international expansion – particularly in the US, where it sees the most significant growth opportunity and has plans for 60 stores by 2026.
To address the drop from Germany, Primark is reviewing its store portfolio with a view to shuttering or downsizing, but it has no plans to retreat.
Speaking about Germany, John Bason, ABF CFO and incoming head of Primark’s strategic advisory board, told Retail Week in November 2022: “We’ve got a big business there and a loyal customer base, so we’re very committed, but the sales densities are too low for a profitable business. That’s the thing that we need to address.”
Overall, the ranking shows a mixed bag of results for the UK’s biggest international retailers, representing enough turbulence to make many think twice about jetting off into new territories just yet.
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Methodology and notes
UK retailer definition: 1) The brand was founded in the UK and primarily operates in the UK domestic market. 2) The brand is owned by an overseas group but has a significant presence in the UK domestic market.
Reporting period: Retailers’ international sales during FY21/22 (FY21)
*Primark does not split out international sales, therefore the figure used is based on its total sales FY21, minus its UK sales in FY21, as reported on Companies House.
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