JD Sports boss has dismissed the issues facing Nike, the company’s biggest supplier. He credited its store range for compensating weaknesses in individual brands.
Regis Schultz said that the retailer is on track to reach its profit target, which ranges from £955 billion up to £1.04billion, despite slowing demand for Nike’s products, and operating in a market it described as competitive and promotional. Nike, the self-proclaimed “King” of Trainers, posted “record-breaking” first-half numbers, which showed robust demand for their tracksuits and training shoes. However, its shares fell by 9p or 6 percent to 140 1/4p due to investor concerns over Nike’s poor performance.
Nike reported the largest drop in quarterly sales ever since the pandemicon Monday night. Investec analyst’s expressed concern that “weakness of innovation and promotional activities” may hurt JD Sports. Schultz said to reporters on Wednesday that JD Sports was a “agile” business, and they knew how to manage the multi-brand game. We do this for a living.
JD Sports stocks a variety of popular brands, including Adidas, On, and Hoka. These brands have recently threatened Nike’s position as the leading sportswear retailer. Nike has been criticized for its lack of innovative products that are appealing to Generation Z. Schultz previously attacked the brand, saying it failed to produce products customers wanted to purchase.
The French businessman who will replace Peter Cowgill by 2022 claimed that JD Sports continued to “outperform” the global sportswear markets during the first half of the year.
The retailer’s operating profit rose 6.7% to £451.1m, which was better than expected. This is despite warnings of a £20m hit due to the strengthening of the pound. Analysts in the City had predicted a profit of £419million.
The statutory profit before tax fell by 64.3% to £126.3m, from £353.7m, due to the closure of the distribution centre in Derby. The sales for the period increased by 5.2 percent to £5.05billion. The retailer stated that footwear continues to sell better than clothing. This is due to the wet weather in Europe and UK. It said that this had an impact on margins, since the industry was selling more stock at discounted rates.
Nike, which is struggling to sell its stock, warned it would need to do more promotions for the rest of the year. Schultz stated that he didn’t plan to follow suit. “We have always stated that we are planning the same promotions as last year. I am aware that our competitors may have a different opinion, but we are determined to be correct.
The retailer group, which owns Milletsand Blacks UK, reported that sales at the outdoor equipment chain in the UK had decreased by 3.2 percent to £263.3 millions compared to the previous period. This was due to the negative impact of key product lines having been delayed earlier in the year by Red Sea problems. Similar-to-like sales fell by 5.3%. JD Sports stated that the poor weather conditions in the second quarter compounded this issue and reduced demand for outdoor products like tents and camping gear.
JD Sports was founded in 1981 in the north-west of England. It has since grown to be a major retailer in sportswear around the globe. The group has 4,500 stores in Europe, North America, and the UK. This growth is largely due to the opening of new stores and strategic partnerships with brands like Nike and Adidas as well as through acquisitions.
JD has invested more than $1 billion in acquisitions since 2017. The most recent was its rival Hibbett Sports, a New York-listed company. This was its largest move into the US after acquiring the Baltimore-based DTLR Villa in 2021 for $495 millions.
Clive Black, Shore Capital, said JD Sports was “completed a major M&A period but wishes to maintain dividend flows over time at lower coverage and, in medium-term, provided that ongoing investment is maintained, the board states that returning excess cash to shareholders will be firmly on its agenda, which we enjoy.”
JD Sports chief executive Bets on Nike’s New Leader to Reverse the Fortunes of the Struggling Shoe Giant Regis Schultz expressed his hope for a turnaround in its largest brand partner by expressing “great happiness” at the appointment of Nike veteran Elliott Hill to its role as chief executive.
Nike announced last week that they were bringing back 60-year-old Hill to replace John Donahoe (64), who had served as President and Chief Executive since January 2020. After a period where demand was weak, resulting in heavy discounts, the new boss is tasked with turning things around at the sporting giant.
Schultz stated that JD Sports looked forward to working together with Hill. He’s an excellent Nike guy and I believe he has the qualities and experience to be a successful CEO for Nike.
He said that he expects Nike to regain its former glory. “I think Nike is coming back.” Nike will be fine. Nike is a powerful brand.”
Nike’s turnaround plans are based on increasing sales of sportswear to “everyday runner” after posting the largest drop in quarterly sales ever since the pandemic.
Matthew Friends, the company’s chief financial officer, stated that its new strategies must focus on regaining share of market in running clothes and shoes. He said that Nike is a company dedicated to running, and Nike is a brand of running shoes. It’s important for Nike win over runners. “Our commitment to reinvesting every day in these channels with our partners on the ground is how we will change the trajectory of the business.”
JD Sports boss slammed reporters in a phone call when asked whether he was worried about Nike’s push to promote running and move away from fashion products.
He said that the media was “making a huge thing out of nothing” when they asked about Nike, and he didn’t worry about its new strategy.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.