Demand for athleisure and young customer base help JD Sports weather the COVID-19 storm, says GlobalData


Following today’s release of JD Sports H1 figures for 2020/21, Alex Hardy, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘JD Sports has been the biggest winner of the UK clothing market over the past five years, growing its market share from 1.8% in 2014 to 2.9% in 2019, and it looks set to gain further share in 2020 as the retailer managed to retain 93.5% of its H1 FY2019/20 revenue, despite the majority of its 2,449 stores being closed for up to three months as a result of the COVID-19 pandemic.

“Group revenue only declined by 6.5% to £2.55bn, as the increased desire for sportswear and athleisure, combined with the retailer’s young shopper base, who are more accustomed to online shopping, ensured demand remained high in comparison with other clothing players. The retailer’s share price also rose 8.9% in early morning trading, despite operating profit falling by £104.4m to £95.4m as a result of increased costs related to online fulfilment and health and safety measures, which are expected across the market. Despite footfall being comparatively weak since stores have re-opened, total revenue (excluding the US) has been approximately 10% above last year, with improved conversion and higher average transaction values, so concentrated marketing efforts and promotions on multi-product purchases should be considered to maintain this.

“Recent online investments, including influencer marketing and the launch of various local websites in countries such as Spain and Malaysia, have paid off for JD Sports, with the channel managing to capture 60% of total revenues from the prior year during the store closure period, despite physical stores normally accounting for 74% of group revenue. However, to mitigate the impact of sports brands such as Nike and Adidas increasingly growing their direct-to-consumer channels, JD Sports must focus on boosting its customer loyalty and ensuring its online offering is top of mind, through impactful social media campaigns and offering competitive delivery options, as well as nurturing its brand relationships to secure the most inspirational and exciting products.

“While JD Sports’ future outlook looks promising, obstacles do lie ahead. A hearing for its appeal of the CMA’s decision to prohibit the acquisition of Footasylum is scheduled for 23 September, and an unsuccessful outcome would require full divestment, most likely below purchase value. Also, footfall remains historically low, and the threat of further lockdowns remains, which would be especially damaging in markets where the online channel is less mature, as well as for already struggling Go Outdoors, which is heavily reliant on physical stores. However, JD Sports should continue driving international expansion, as this has been critical to recent performance, with US revenue increasing by 14.2% during H1 FY2020/21, and stores in markets less affected by COVID-19 able to remain open.”