JD Sports shares jump 10% on plan to expand stores

The athletic leisurewear retailer is hoping to open between 250 and 350 new stores each year for the next five years

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

JD Sports will spend up to £3bn (€3.4bn) to open as many as 1,750 stores over the next five years, said its new chief executive Régis Schultz, outlining his plans for the retailer to become an athletic leisurewear "powerhouse".

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

His expansion plan sent JD shares soaring to almost 10% higher, their highest level for about a year. With a market capitalisation of £8.4bn, 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 US, France, Italy, Germany, and Spain, said Mr Schultz.

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

That will mean spending between £500m and £600m 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% each year over the next five years, with the group also aiming to deliver a double-digit operating margin during the period and cash generation of £1bn per year.

Mr 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. 

Reuters