JD Sports to invest $260 mln in U.S. to maintain momentum
* May bring forward plans for European warehouse as Brexit
* HY profit rises nearly 19 pct on overseas expansion
* To open 5 new stores in U.S. in H2
* Co to focus on Asia Pacific, Europe, U.S.
(Adds CFO comments on expansion plans, Brexit; shares)
By Muvija M and Arathy S Nair
Sept 11 (Reuters) - Britain's JD Sports promised on
Tuesday to back up its purchase of U.S. chain Finish Line by
investing 200 million pounds ($260.7 million) over the next five
years after overseas growth helped fuel a 19 percent rise in
The company, now Britain's biggest sportswear retailer with
about 1,500 outlets in 16 countries, could bring forward plans
for a continental European warehouse due to Brexit, Chief
Financial Officer Brian Small said.
Revenue rose 35 percent in the half year to Aug. 4 at the
chain, which has benefited from the global trend towards
"athleisure" - or wearing sportswear while not playing sport.
It said second half sales looked to be continuing in the
"Against a backdrop of widely reported retail challenges in
the UK, it is extremely reassuring that the profitability in the
UK and Ireland Sports Fascias has been further enhanced," the
company said in the half-year report.
JD Sports has been looking abroad to boost profit for some
time, calling its home market saturated.
It has opened 39 new stores in international markets this
year and in March paid $558 million for U.S.-chain Finish Line -
a big bet that it can replicate a model based on tight
relationships with Nike and Adidas that has helped its shares
outperform those of rivals Foot Locker and Sports Direct
in the past three years.
Chairman Peter Cowgill told the Financial Times this year
that he lost sleep after buying the U.S. business - by far the
company's biggest deal since it was founded as a small high
street store in the north English town of Bury in 1981.
"The Finish Line has historically under-invested in its
stores and because of that, they have not had the same access to
products," Small told Reuters in a telephone interview.
"We believe that our approach to retailing means that we can
improve the results of the Finish Line stores by introducing
more concentration on the detail of the business and better
visual merchandising standards."
The company will open five new stores, branded as JD Sports,
in the second half of the year in the United States, Small said,
adding that it would look to grow in Asia Pacific, Europe and
Hargreaves Lansdown analyst Laith Khalaf said the retailer
was now knocking on the door of the FTSE 100 index of leading
stocks, as its 4.7 billion pound market capitalisation matched
that of venerable retailer Marks & Spencer .
JD Sports said it would look to make changes to its IT
systems to tackle more administration and documentation that is
likely to arise when Britain leaves the EU next March.
"It has always been our plan to have a warehouse actually
located in mainland Europe, some time early in the next decade,
and I think that Brexit may bring forward the date that is
desirable," Small told Reuters.
Finish Line contributed revenue of 180 million pounds and a
profit before tax of 3.5 million pounds to the first half
Shares of the company were up about 1.5 percent at 494.5
pence by 1030 GMT.
($1 = 0.7674 pounds)
(Reporting by Arathy S Nair and Muvija M in Bengaluru
Editing by Patrick Graham/Keith Weir)
First Published: 2018-09-11 08:14:29
Updated 2018-09-11 12:35:05
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