Like a pair of its Nikes, JD Sports is well cushioned
The retail veteran is proving it has the kit to handle competition as strong results lay to rest fears that the ‘athleisure’ trend is at an end
If JD Sports boss Peter Cowgill reckons that US rival Foot Locker deserves a “cigarette break” from its stellar track record, is the British retail veteran warning investors that it might be disappearing round the back of the bike sheds soon too? JD Sports shares have been shaken by investor jitters in recent months. Firstly, there have been concerns that Foot Locker’s sales shock last month could have implications for its own business. Secondly, there are nerves that Nike’s deal to sell trainers directly on Amazon could reduce the need for customers to buy from JD Sports. Thirdly, analysts reckon a resurgent Sports Direct could once again rear its head and steal back shoppers.
However, investors needn’t have worried as JD Sports shrugged off all these fears by delivering a 41pc jump in sales and record half-year profits.
The group has simply become a victim of its own success. Shareholders have become used to the sportswear retailer smashing forecasts due to it being the best positioned player in the booming “athleisure” market. The trend has fuelled demand for trainers that will never see the treadmill and propelled JD Sports, with half of its sales coming from exclusive ranges with the likes of Nike and Adidas that have driven shoppers into its stores.
While JD Sports’ sales are softer than the year before, Cowgill blamed this on fewer new products from big brands like Nike and Adidas, rather than any sign that the athleisure trend was over. He insists the adoption of tracksuits for nonsporting activities is a “cultural” trend, rather than a fickle fashion one.
There are still concerns about whether the retailer’s growth will slow further if household budgets start shrinking again and shoppers no longer have the cash for £120 Nike Air Max trainers.
But the business will at least be cushioned by growth from its European expansion and bolstering its outdoors business, which includes a revived Blacks and Millets.
Now the largest seller of tents in the market, JD Sports also stands to benefit if cash-strapped holidaymakers decide to camp at home rather than going abroad.
While JD Sports might not be able to keep up with its own track record, the retailer remains investors’ best hope on the high street.
Retail revolving doors
The back-to-school period is often a lucrative time for retailers, but this year it has led to a rash of boardroom expulsions. Dunelm’s John Browett has been shown the door after the third culture clash of his career; New Look’s Anders Kristiansen was ousted after poor results; Debenhams has parted ways with one of its longest serving directors; Notonthehighstreet chief executive Simon Bellsham has left; and Hobbycraft’s boss John Colley is exiting after an embarrassingly short two months.
The revolving doors are symptomatic of the difficulty in leading businesses that are struggling to keep up with the rapid shift in retailing. Chief executives can no longer rely on the well-worn strategy of adding more stores to grow sales as online shopping accelerates.
They can’t take the simple cost-cutting approach of slashing jobs either as shoppers now expect better service than ever.
At New Look, Kristiansen had been the right man for the job while the sales were going in the right direction. But a 7.5pc drop in sales suddenly screams problem. The odd thing behind his ousting is that he was taking steps in the right direction, overhauling its product team and bringing in Zara-influenced creative directors. He just didn’t move fast enough. Now he’s out. New Look’s parent Bait has canned his former Inditex hire as chief creative and brought back Roger Wightman, founder Tom Singh’s righthand man. I would consider this a clumsy step backwards in New Look’s attempts to make itself more relevant to modern retailing.
Last year an influential survey declared that more than a third of retail bosses were “not fit-for-purpose, particularly when it comes to their lack of mastery of digital and data-driven skills”. But while former shelf-stackers need no longer apply, all retail chiefs must remember the simple answer to career longevity is making sure they’re selling what customers want to buy.
Last month Fox News stopped broadcasting in the UK, blaming low viewing figures. At the time the organisation insisted it was absolutely nothing to do with putting distance between the US broadcaster’s sexual harassment allegations and parent 21st Century Fox’s second attempted Sky takeover. It needn’t have bothered.
Yesterday Karen Bradley sent shock waves by referring the takeover to the competition watchdog. This means the Murdochs will face an uncomfortable six-month trawl through their records as a broadcaster and publisher. Any delay to the deal is the last thing the Murdochs want. It also means the CMA will be reviewing their editorial standards when civil trials over the alleged phone hacking at The Sun, which are in the pipeline, could throw up further damaging material. The longer this deal takes the more doubtful it is that it will cross the line in its current state.
‘Tracksuits for nonsporting activities is a cultural trend, not a fashion one’