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

The Daily Telegraph - Business - - Business Comment - Ash­ley Arm­strong

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.

Fan­ci­ful Fox

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’

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