JD Sports targets 800 stores in US market
JD Sorts' new chief executive Régis Schultz is spearheading the UK brand's ambitious international expansion plans with the focus on cracking the American market.
Appointed just six months ago, Schultz wants to achieve double-digit sales growth and profit margins over the next five years and the North American market will be crucial to achieving that goal, he told The Sunday Times.
Analysts believe that sort of growth would propel the FTSE 100 giant’s underlying pre-tax profits from £947 million last year towards the £2 billion mark. Global sales last year hit £8.56 billion.
Schultz wants to grow its US store network from 137 to about 800 over the next five years. About half will come from store conversions of Finish Line (the sportswear retailer acquired in 2018) into JD-branded stores. The other half will be new stores, focused on the western US.
The American focus, added to expansion plans in Europe and Asia, would result in about 1,400 JD stores opening over the next five years, taking the total to more than 2,400.
And key to its US-dominated expansion will be JD’s growing relationship with Nike. After all, the US giant’s Air Force 1 footwear range accounts for between 10% and 20% of JD’s £4.6 billion annual footwear sales.
While Nike has severed ties with many third-party retailers it once supplied, Schultz says its relationship with Nike is different.
“We create value by expressing Nike’s products differently — being next to [brands like] Juicy Couture and Hoodrich says to the customer: this is a cool brand," he said. “If we are just another door for Nike, there is no future for us.”
Schultz also cited JD’s important ties with Adidas and the growing popularity of New Balance and Swiss running brand On.
And he said JD’s challenge will be raising brand awareness in the US, where it has only 295,000 Instagram followers, compared with 2.1 million in the UK. The retailer is using payment data to track consumers who are spending at rivals and then targeting them with ads when they watch YouTube.
When JD opens a store, it also gives local influencers $550 of store credit in exchange for them broadcasting their shopping spree to followers, it said.
And while JD has serious expansion plans, it has also been on a mission to consolidate the number of brands within its portfolio.
When taking up the lead job with JD, Schultz said he was shocked to find that he had 35 people reporting directly into him — a legacy of former chairman Peter Cowgill’s acquisitions of fashion brands whose founders reported to him. Schultz agreed to sell 15 of them to Frasers Group across December and January.
“Of 42 acquisitions over the past six years, 38 were not strategic,” says Schultz. “We need to focus on what matters.”
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