LONDON, Feb 2 (Reuters) – Britain’s JD Sports (JD.L) will spend up to 3 billion pounds ($3.7 billion) to open up to 1,750 stores over the next five years, a said new CEO Regis Schultz, describing his plans for the retailer to become a “powerhouse” of athletic leisurewear.
Schultz, a former boss of French retailer Monoprix, took over the FTSE-100 company JD in September after a tumultuous period that culminated in the ousting of longtime executive chairman Peter Cowgill in May.
His expansion plan sent JD shares up 8% to 177 pence midday on Thursday, their highest level in about a year.
With a market cap of £8.4bn, JD is similar in size to UK retailer Next (NXT.L) and worth almost three times as much as Marks & Spencer (MKS.L).
JD, which sells Nike, Adidas and other sports fashion lines primarily to customers under 30, will focus on adding new stores in the United States, France, Italy, Germany and Spain, Schultz said.
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He wants JD Sports’ market share in these geographies to reach more than 10%. The group already holds this market share in Great Britain, Ireland and Australia.
This will mean spending between £500m and £600m a year, JD said, with up to 60% opening 250-350 new stores each year in its key regions.
Acquisitions will also play a role in future growth, Schultz said, although JD Sports would be more disciplined than before. Last year, under the previous leadership, UK regulators ordered the company to sell Footasylum, which it had purchased, 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 longer than if we are able to buy some existing doors,” he said. he declared.
The expansion is expected to help JD Sports grow revenue by more than 10% each year for the next five years, with the group also aiming for double-digit operating margin over the period and cash generation of 1 billion. books per year.
Schultz dismissed concerns that JD’s business model could be threatened by Nike and Adidas seeking to sell more merchandise directly to customers.
“We’re creating something unique for Nike and all the brands because we’re a lifestyle, they’re sports,” he said.
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Reporting by Sarah Young; edited by James Davey and Susan Fenton
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