How JD Sports became a £5bn company

News

JD Sports has continued its stellar rise after reporting record half-year profits on Tuesday.

The retailer, which also owns Size, Blacks and Go outdoors, said that pre-tax profits rose a fifth to £121.9 m for the six months to 4 August.

The results sent shares in Britain’s biggest retailer of sports clothing 6% higher at 518p, leaving the company with a value of close to £5bn.

JD has about 500 stores in the uk and has one of the more than 1700 outlets around the world.

Peter Cowgill, executive chairman of JD Sports, said that its earnings higher in the uk and Ireland were “very rewarding” despite the challenges facing the retail sector.

“This reflects the value of the investments that have been made over a number of years in the development of a dynamic multi-channel proposition that marries the best of physical and digital retail,” he said.

While the JD is listed on the FTSE 250 index of mid-market companies, Hargreaves Lansdown analyst Laith Khalaf said that it was now he was knocking on the door of the FTSE 100 index of leading shares to join M&S.

His rising fortunes are in contrast with rivals such as Footaslyum, whose shares plunged last week after issuing an unexpected profit warning.

JD is now more than twice as valuable as the rival retailer Sports Direct, which is a value of £1.9 bn – and more High Street stalwart Marks & Spencer, which has a value of around £4.75 million euros.

Amy Higginbotham, retail analyst at GlobalData, said JD’s success was due in part to the popularity of “athleisure”, as well as the supply of exclusive products of high-quality brands such as Nike and Adidas.

“This, as well as their ability to remain relevant and engage with customers through the sponsorship of athletes such as Anthony Joshua, that the difference of the emerging online competitors, such as Gymshark, Asos and boohoo.com,” she said.

“In addition, continued investment in its physical stores do JD Sports more resilient to the challenges that threaten the uk High Street and have a significant impact on the competition, as Mike Ashley Sports Direct.”

Getty Images

In its latest results, JD explained why the shops were still crucial, despite the rise of online sales: “often the social nature of consumers’ shopping trips and impulsive nature of their purchase decisions combined with the importance of cash to a high proportion of our demographic, means that we expect the physical retail to retain much of its current level of importance.

“The store base remains essential for the understanding of the brand, the client’s desire to see, handle and test the product, and our ability to provide multiple points of delivery.”

JD Sports recently made its first major acquisition, the payment of $558m for US footwear retailer The finish Line, which has more than 550 stores and 375 concessions in Macy’s department stores.

The inauguration is a big bet that it can continue its close relationship with Nike and Adidas, despite a growing desire on the part of the two giants of the sports apparel to sell directly to consumers through their own stores or web sites.

“The goal Line has historically under-invested in its stores and because of that, they have not had the same access to the products,” said JD chief financial officer Brian Small.

“We believe that our approach to retailing means that we can improve the results of the goal-Line in the shops through the introduction of a greater concentration on the detail of the business and the best standards of visual merchandising.”

JD is also worth more than Foot Locker, the New York-listing of footwear chain, which is valued at $5.67 billion (£4.36 bn).

The retailer traces its origins back to a single store, John David Sports, in Bury which opened its doors in 1981.

Two years after it had expanded in the Arndale Centre in Manchester, with further openings in the North of ireland in the 1980s.

The first store in London, followed in Oxford Street in 1989 and JD had 56 stores when it listed in 1996, just under 15p a share.

In 2002, he acquired almost 200 more stores by the First Sport of the string.

Since 2005, JD has been controlled by the private Pentland Group, which owns the sports and fashion brands such as Lacoste and Speedo.