JD Sports eyes growth as Primark rethinks US

JD Sports eyes growth as Primark rethinks US

By Geoff Percival

UK retailer JD Sports plans to open more shops in Ireland as it looks outside of the UK for its next phase of growth.

The company already operates nearly 30 stores — across its JD Sports, Champion Sports and Size? brands — on the island of Ireland.

Speaking on the back of a strong set of annual results, executive chairman Peter Cowgill said “because of the saturation in the UK [sportswear] market, the main focus would be overseas development.”

A spokesperson declined to comment on the prospects of entering new geographical markets, but said the business would be looking to grow in existing markets.

Outside of the UK, JD Sports has shops in Ireland, France, Spain, Finland, and Malaysia. Last month it entered the US market through the $558m (€452m) purchase of sports clothing retailer Finish Line, and last year agreed a joint-venture in South Korea.

In its latest financial year, up to the beginning of February, JD Sports generated revenues of £3.16bn (€3.7bn) and posted a 25.5% rise in pre-tax profit to £307.4m as demand for tracksuits and trainers remained strong.

Shares in the company rose as much as 7.9% as the markets cheered a rare bright spot among troubled British clothing retailers.

Analysts at brokerage Peel Hunt lauded JD Sports’ performance as a “stand-out effort” at a tough time for the industry and the consumer as competition grows online and Britons face pressure on their spending power.

Elsewhere, the parent company of Dublin-based discount clothing retailer Primark has said that while its US stores are producing encouraging results it needs to learn more about the American market before it will consider a major store roll-out there.

Primark yesterday reported a 7% year-on-year rise in first half revenues to just under £3.78bn, with adjusted operating profit ahead by 4% at £341m.

At the publication of its first quarter results, in January, Primark said it was pleased with its performance in Ireland — where it trades as Penneys — but declined to comment on plans by the Dealz chain to branch into discount clothing in direct competition.

Primark’s first half figures drove growth at parent Associated British Foods (ABF), which reported a 3% rise in revenues to £7.42bn.

Primark opened its first US store in downtown Boston in 2015 and currently trades from eight stores. A ninth will open in Brooklyn this year and a tenth in Florida in 2019.

Analysts see Primark’s expansion as the critical driver of ABF’s prospects and consider the US a potential gamechanger for the group.

“We’re quietly encouraged by what we’re seeing so far,” said chief executive George Weston.

“We continue to learn... but it’s still very early days.”

Mr Weston said the Florida store, in Sawgrass Mills, would provide the opportunity to trade in a different type of retail environment, in both mall format and geographic location, from its existing stores.

“It’s a great opportunity to test that market in a mall which is actually the busiest tourist attraction in the whole state after Disneyworld,” he said.

An estimated 45m people visit the mall every year.

Primark, which trades from 352 stores in 12 countries, accounts for about half of ABF’s revenue and profit.

Additional reporting Reuters

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