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1. Company Snapshot

1.a. Company Description

JD Sports Fashion plc engages in the retail of branded sports fashion and outdoor clothing, footwear, accessories, and equipment for kids, women, and men.It operates through Sports Fashion and Outdoor segments.The company also retails leisure goods, sports goods, fishing gear, watches, jewellery, camping goods, boats, and bicycles, as well as distributes sports apparel and accessories, footwear, and apparel.


It offers its products under the JD, Size?, Footpatrol, Finish Line, Shoe Palace, DTLR, Livestock, Sprinter, Sport Zone, Sizeer, JD Gyms, Tessuti, Scotts, Go Outdoors, Blacks, Millets, Tiso, Ultimate Outdoors, Fishing Republic, and Naylors brands.The company also operates online business.In addition, it licenses fashion brands and operates fitness centers; operates as online own label women's fashion retailer; and manufactures and distributes professional fitness equipment.


The company operates 3,402 stores.It has operations in the United Kingdom, Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, the Czech Republic, Denmark, Dubai, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Israel, Italy, Latvia, Lithuania, Malaysia, the Netherlands, New Zealand, Poland, Portugal, Republic of Ireland, Romania, Singapore, Slovakia, South Korea, Spain and the Canary Islands, Sweden, Thailand, and the United States.The company was founded in 1981 and is headquartered in Bury, the United Kingdom.


JD Sports Fashion plc is a subsidiary of Pentland Group Limited.

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1.b. Last Insights on JD

JD Sports Fashion's recent performance was negatively impacted by strained consumer spending, rising youth unemployment, and fading sneaker hype. The company's group revenue declined 1.7% in Q3 to £2.95 billion, and it warned on holiday profits due to macroeconomic and consumer volatility. Youth unemployment is damaging sales of trainers, and unusually warm weather affected clothing sales in September. The retailer expects profit to be at the bottom end of consensus. Analysts have adjusted their price targets and expectations due to evolving sentiment on the company's prospects.

1.c. Company Highlights

2. JD Group's Resilient H1 Performance Amidst Challenging Trading Environment

JD Group reported a 20% year-on-year increase in total sales, driven by the acquisition of Hibbett and Courir, with organic sales growth of 2.7% at constant FX rates. The operating margin stood at 6.2%, with a decline in the North American margin due to the wind-down of the Finish Line fascia and the impact of Hibbett. Earnings per share (EPS) came in at 0.046, slightly below estimates of 0.0466. Despite the challenging trading environment, JD Group maintained its trading disciplines, with gross margin at 48%. The company's focus on operational efficiency and cost management is evident, with expected cost benefits of over GBP 20 million related to technology and supply chain double running costs across FY '27 and FY '28.

Publication Date: Oct -27

📋 Highlights
  • Organic Sales Growth:: 2.7% at constant FX rates, driven by North America and Europe, with total sales up 20% (GBP 869M from Hibbett and Courir).
  • Operating Margin:: 6.2% (6.3% lower at constant FX), impacted by Finish Line wind-down and Hibbett integration costs.
  • Cost Efficiency:: Over GBP 20M in technology/supply chain savings expected post-2027, offsetting 4.7% higher operating costs from new stores.
  • Free Cash Flow Turnaround:: GBP -68M in H1, but GBP 125M net debt reduction expected by FY end, with GBP 100M share buyback program announced.

Financial Performance Highlights

The company's summary financials show a net increase in operating profit, excluding the impact of Hibbett and Courir. The acquisition of Hibbett has contributed significantly to JD Group's sales growth in North America, with the company leveraging its complementary fascia and delivering back-office synergies. JD Group's European online business is growing, albeit from a low base, and is expected to benefit from the implementation of Heerlen, which will improve online service and reduce costs.

Operational Efficiency and Cost Management

JD Group is investing in technology infrastructure, including a merchandising tool with AI capabilities and a finance system. The RFID rollout will start in the UK and then expand globally, resulting in significant time savings for employees. The company is also streamlining its processes and systems in finance, leading to reduced audit fees. As Regis Schultz noted, "We're investing in tech infrastructure... RFID rollout will start in the UK and then expand globally."

Valuation and Growth Prospects

With a P/E Ratio of 10.54 and an EV/EBITDA of 5.79, JD Group's valuation appears reasonable. Analysts estimate next year's revenue growth at 11.0%, indicating a positive outlook for the company's growth prospects. The company's focus on apparel has given it a unique competitive advantage, with strong progress against its mid- and long-term priorities. JD Group's commitment to delivering a strong free cash flow and enhancing shareholder returns is evident, with a second GBP 100 million share buyback program announced in August.

Market Share Gains and Strategic Priorities

JD Group has gained market share in North America and Europe, driven by its multi-brand model and omnichannel approach. The company is focusing on key country markets, including France, Iberia, Italy, Benelux, Greece, and Poland. In the UK, JD Group's primary focus is on enhanced productivity, larger through fewer, bigger, better stores, and optimizing the store footprint in the best locations. The company's strategic priorities are on track, with a focus on improving operational efficiency and leveraging technology to support colleagues and customers.

3. NewsRoom

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Is Weakness In JD Sports Fashion Plc (LON:JD.) Stock A Sign That The Market Could be Wrong Given Its Strong Financial Prospects?

Dec -01

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JD Sports Warns on Holiday Profits Amid Strained Consumer Spending Headwinds

Nov -20

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FTSE 100 up but mixed US jobs data tempers gains

Nov -20

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JD Sports Crashes Into Confidence Wall as UK Shoppers Vanish and Youth Spending Falters

Nov -20

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Youth unemployment is hitting sales of trainers, says JD Sports

Nov -20

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Rising unemployment hitting shopper confidence, says JD Sports

Nov -20

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JD Sports Sees Profit at Bottom End of Consensus Due to Macroeconomic, Consumer Volatility

Nov -20

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Simon Unveils Rewards-stacked Loyalty Program

Nov -12

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.76%)

6. Segments

JD Retail

Expected Growth: 8%

JD Retail's 8% growth is driven by strategic expansion into new markets, effective e-commerce integration, and a strong brand portfolio. The segment benefits from a loyal customer base, successful marketing campaigns, and a focus on premium and own-brand products. Additionally, JD Retail's efficient supply chain and inventory management contribute to its growth.

JD Logistics

Expected Growth: 7%

JD Logistics' 7% growth is driven by increasing e-commerce demand, strategic partnerships with JD Sports Fashion plc, and expansion into new markets. Additionally, investments in technology and infrastructure have improved operational efficiency, allowing for faster and more reliable delivery services, further fueling growth.

Inter-segment

Expected Growth: 5%

JD Sports Fashion plc's 5% inter-segment growth is driven by strategic expansion into new markets, successful integration of acquired businesses, and effective inventory management. Additionally, the company's focus on omnichannel retailing, investment in digital capabilities, and strong brand portfolio have contributed to the growth.

New Businesses

Expected Growth: 10%

JD Sports Fashion plc's 10% growth in new businesses is driven by strategic expansion into new markets, increased online presence, and successful integration of acquired companies. Additionally, the company's focus on premium products, effective inventory management, and strong supplier relationships contribute to its growth momentum.

Dada

Expected Growth: 9%

JD Sports Fashion plc's 9% growth driven by strategic expansion into new markets, successful integration of acquired businesses, and strong e-commerce performance. Additionally, the company's focus on premium products, effective inventory management, and investments in digital marketing and customer experience have contributed to its growth momentum.

7. Detailed Products

Footwear

JD Sports Fashion plc offers a wide range of footwear from top brands such as Nike, Adidas, and Reebok, catering to various sports and fashion needs.

Apparel

The company sells a variety of apparel products, including tops, bottoms, and outerwear from popular brands like The North Face, Under Armour, and Puma.

Equipment

JD Sports Fashion plc offers a range of sports equipment, including footballs, basketballs, and athletic gear from leading brands.

Accessories

The company sells various accessories, such as hats, bags, and watches, from popular brands like New Era, Adidas, and Fossil.

Outdoor Gear

JD Sports Fashion plc offers outdoor gear and equipment from brands like The North Face, Berghaus, and Coleman, catering to camping, hiking, and outdoor enthusiasts.

Fashion and Lifestyle

The company sells fashion and lifestyle products, including clothing, footwear, and accessories from brands like Nike, Adidas, and Converse.

8. JD Sports Fashion plc's Porter Forces

Forces Ranking

Threat Of Substitutes

JD Sports Fashion plc faces moderate threat from substitutes, as customers have limited alternatives for sports fashion products. However, the rise of online marketplaces and second-hand sports fashion products could pose a threat.

Bargaining Power Of Customers

JD Sports Fashion plc has a large customer base, but individual customers have limited bargaining power. The company's strong brand presence and wide product range also reduce customer bargaining power.

Bargaining Power Of Suppliers

JD Sports Fashion plc relies on a few large suppliers for its products, giving them some bargaining power. However, the company's scale and strong relationships with suppliers mitigate this risk.

Threat Of New Entrants

Entering the sports fashion market requires significant investment and established relationships with suppliers. JD Sports Fashion plc's strong brand presence and scale make it difficult for new entrants to compete.

Intensity Of Rivalry

The sports fashion market is highly competitive, with several established players competing for market share. JD Sports Fashion plc faces intense rivalry from competitors such as Sports Direct and Foot Locker.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 53.64%
Debt Cost 6.13%
Equity Weight 46.36%
Equity Cost 11.80%
WACC 8.76%
Leverage 115.71%

11. Quality Control: JD Sports Fashion plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 4.1/10

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.83$

Current Price

0.83$

Potential

-0.00%

Expected Cash-Flows