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JD Sports' new CEO Schultz lays out growth plans

JD-SPORTS-OUTLOOK:JD Sports new CEO Schultz lays out growth plans
JD-SPORTS-OUTLOOK:JD Sports new CEO Schultz lays out growth plans Copyright Thomson Reuters 2023
Copyright Thomson Reuters 2023
By Reuters
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(Adds dropped words "on average" in paragraph 10)

By Sarah Young

LONDON -British-based JD Sports will spend up to 3 billion pounds ($3.7 billion) to open as many as 1,750 stores over the next five years, said new CEO Régis Schultz, outlining his plans for the retailer to become an athletic leisurewear "powerhouse".

Schultz, a former boss of French retailer Monoprix, took over at FTSE-100 company JD in September following a tumultuous period that culminated in the ousting of long-standing executive chairman Peter Cowgill in May.

His expansion plan sent shares in JD up 8% to 177 pence by midday trading on Thursday, their highest level for about a year.

With a market capitalisation of 8.4 billion pounds, JD is a similar size to British retailer Next and worth almost three times as much as Marks & Spencer.

JD, which sells Nike, Adidas and other sports fashion ranges primarily to customers under 30, will focus on adding new stores in the United States, France, Italy, Germany and Spain, said Schultz.

He wants JD Sports' market share in those geographies to grow to more than 10%. The group already has that market share position in Britain, Ireland and Australia.

That will mean spending between 500 million and 600 million pounds per year, JD said, with up to 60% going on opening between 250 and 350 new stores each year across its key regions.

Acquisitions will also play a role in future growth, Schultz said, although JD Sports would be more disciplined than previously. Last year under previous management, UK regulators ordered the company to sell Footasylum, which it had bought, at a substantial loss.

"Acquisitions will be around doors in Europe because we need more doors, and, in Europe opening doors one by one takes more time than if we are able to buy some existing doors," he said.

The expansion should help JD Sports grow revenue by more than 10% on average over the next five years, with the group also aiming to deliver a double digit operating margin during the period and cash generation of 1 billion pounds per year.

Schultz dismissed concerns that JD's business model could be threatened by Nike and Adidas looking to sell more goods directly to customers.

"We create something unique for Nike and all the brands because we are lifestyle, they are sports," he said.

($1 = 0.8142 pounds)

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