Staycations and demand for comfortable athleisure allow JD Sports’ to continue its pandemic success, says GlobalData

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Following today’s release of JD Sports’ figures for H1, FY2021/22; Darcey Jupp, associate retail analyst at GlobalData, a leading data and analytics company, offers her view: “JD Sports continues to prove resilient despite lingering uncertainty surrounding COVID-19, producing an impressive 52.7% growth on the year in total group revenue for H1 FY2021/22 to £3,885.8m Its Sports Fashion and Outdoor divisions continued to perform strongly (up 45.0% and 15.2% respectively versus the same period pre-pandemic), as athleisure remained popular both throughout lockdowns and when social restrictions lifted, as younger consumers in particular have become accustomed to the comfort and versatility it offers, and an increase in staycations also boosted demand for camping and outdoor gear, pushing total revenue 42.8% (£1,164.6m) higher than H1 FY2019/20.

“JD Sports’ operations in the US continue to pick up significant momentum, finishing this half up 85.9% versus H1 FY2019/20. The recent acquisition of DTLR and Shoe Palace helped boost sales, giving it a wide geographical coverage across the region along with JD Sports/Finish Line. Fiscal stimulus payments and minimal COVID-19 restrictions also encouraged US consumers to spend more, resulting in less promotional activity. In its home market, the UK, strong revenue returned, rising 30.2% versus H1 FY2019/20 as demand for athleisure remains high and the retailer has been protected by its strong proposition. However, warning flags have been raised suggesting that JD Sports may fall victim to the ongoing supply chain issues caused by Brexit and the pandemic. It cites that stock issues on its best performing lines have hampered some sales, but such impressive results suggest this should not significantly disrupt its success if this remains a short-term problem. A new warehouse in the Netherlands set to be fully operational by mid-2024 will also help alleviate the long-term supply issues arising from Brexit.

“The battle between JD Sports and the CMA surrounding its takeover bid for Footasylum continues to create uncertainty over the group’s future portfolio, with the final report being released in October 2021. The CMA cites the risk of reduced competition in the sports market as a concern, however, the competition appeal tribunal has previously stated that the CMA is acting “irrationally” due to the significant acceleration of the direct-to-consumer strategies of sports giants Nike and Adidas. New rumours about a planned stake purchase or full acquisition of fashion e-tailer Missguided suggests JD Sports may be preparing for a blow in October and is already refocusing its future portfolio growth. Such a move into the successful UK fast fashion market could prove advantageous to diversify its portfolio, however the group’s lack of expertise in the area may inhibit the potential of a full takeover.”