‘JD Sports must call on bench strength to stay top of the league’

Under executive chair Peter Cowgill, who ran JD Sports for almost two decades, it was a prolific striker – every set of results seemed to be prefaced with the word “record”.

Cowgill, like the manager of his beloved Manchester City, Pep Guardiola, took his team to the pinnacle of success.

But that long run at the top now looks to be in serious jeopardy after a string of setbacks. 

“The parting of ways with Cowgill will have been a shock to many at JD, who have become accustomed to success during his tenure”

Cowgill himself has gone, of course. He made an abrupt exit from JD Sports at the end of last month, following an apparent dispute over governance and demands that the role of chief executive and chair should be split. 

That followed a fine of £4.7m – a burden shared with Footasylum, which JD had acquired – following competition concerns that they had shared commercially sensitive information and conducted clandestine meetings in a car park. The Footasylum deal had already been subject to a competition investigation, leading to an order that it should be reversed.

Then, this week, the Competition and Markets Authority revealed that it is “investigating suspected anti-competitive behaviour in relation to the price at which Rangers FC-branded replica football kit was sold”. Along with JD, Rangers’ kit manufacturer Elite Sports and the Glasgow-based club are also included in the provisional finding of illegality. JD has made a provision of £2m in its delayed full-year results to cover anticipated fines and legal costs. 

Caretaker bosses

JD has no permanent replacement lined up for Cowgill at present – non-executive duo Helen Ashton and Kath Smith have taken on the roles of interim non-executive chair and interim chief executive, respectively.

Smith brings relevant experience – she was formerly managing director of the Adidas and Reebok brands and vice-president of The North Face in the EMEA region. But three of JD’s main board members joined in 2019 or 2021. They hae been there through the pandemic but could not be said to be steeped in the business. The exception is Neil Greenhalgh, the chief financial officer who has been at JD since 2004 and in his current role since 2018.

Given the lack of internal candidates to take the reigns as a long-term successor, the parting of ways with Cowgill will have been a shock to many at JD, who have become accustomed to success during his tenure.

JD pledged at the time of the management changes that the focus would be to “continue to deliver on the group’s proven and successful strategy”. That plan, however, has appeared not quite so proven and successful as was previously thought, though full-year results – delayed in part because of the governance review and expected later this month – should record profits of £940m.

Despite the soothing noises and the fact that there seems no cause for immediate concern, there may be more setbacks to come for JD. What starts off as a trickle of bad news can often turn into a flood.

The retailer makes great play of its strong relationships with suppliers. “International brands regularly call JD out as a premier global strategic partner,” Cowgill noted in JD’s interim results last September. To what extent might the turmoil and reputational tarnish at JD prompt a reassessment by brands? To what extent, after a series of run-ins, may the CMA bring further scrutiny to bear on other JD relationships? 

Rivals catching up

JD is in the line of fire too as a new boss takes over at its arch-rival, Sports Direct owner Frasers Group. Michael Murray has been pursuing an ‘elevation’ strategy for some time at Frasers as he seeks to move the business away from a pile-it-high-sell-it-cheap approach that alienated some brands,and convince them to part with their best stock.

The likes of Nike are already being wooed, it seems – Murray hosted the sportswear giant’s chief executive John Donahoe and president Heidi O’Neill last month as part of the charm offensive. 

“Now would be an advantageous moment for Michael Murray to attempt to break through JD’s defences”

He has also bolstered his management team, including by hiring former Nike executive Ger Wright as managing director of sports. Wright, according to Murray, brings “a wealth of incredible experience that will be invaluable to our future” and her appointment “is a real testament to our elevation strategy”.

Now would be an advantageous moment for Murray to attempt to break through JD’s defences and score. No doubt his predecessor and father-in-law, Sports Direct founder Mike Ashley, would be only too happy to provide advice if needed.

JD is right to tighten up its governance – its recent problems and altercations with the CMA demonstrate the extent to which oversight is necessary. 

But there is no doubting the contribution that Cowgill made to JD. As the retailer confronts problems particular to it, along with those facing the industry in general, it will need to call on the strength and depth on its bench – and take time to appoint the right successor – if it is to remain at the top of retail’s premier league.

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