REG - JD Sports Fashion - Unaudited FY24 Results
31/05/2024 07:00
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RNS Number : 6163Q JD Sports Fashion PLC 31 May 2024
31 May 2024
JD SPORTS FASHION PLC
UNAUDITED FY24 RESULTS
FOR THE 53 WEEKS TO 3 FEBRUARY 2024
STRATEGIC PROGRESS IN A CHALLENGING MARKET
JD Sports Fashion Plc (the 'Group'), the leading global retailer of sports,
fashion and outdoor brands, today announces its full year unaudited results
for the 53 weeks ended 3 February 2024. To aid comparison, the FY24 results,
associated commentary and percentage changes are presented below on an
unaudited 52-week basis unless otherwise stated.
Commenting on the results, Régis Schultz, Chief Executive Officer of JD
Sports Fashion Plc, said:
"In the period, we again outperformed the market delivering organic sales
growth* of 9% and Premium Sports Fashion organic sales growth* of 11%. This
strong revenue performance was delivered in a challenging market, particularly
through our peak trading period.
"We made important strategic progress: putting the JD Brand First through
opening over 200 new JD stores; strengthening our Complementary Concepts
through the proposed acquisitions of Courir and, announced after the period
end, Hibbett; simplifying the group by taking full control of ISRG and MIG and
divesting non-strategic businesses; building the right governance and
organisation for a global group of our size; and investing in our people and
infrastructure to deliver our growth strategy.
"I would like to take the opportunity to thank our people throughout the
business for their hard work in delivering another year of market
outperformance.
"We have started the new financial year with Q1 in line with our expectations
in a volatile market and we are on track to deliver our profit guidance for
the full year. Looking further ahead, we have a strong business model and a
clear strategy to deliver long-term growth and value creation for our
shareholders."
Performance summary
£m 53w to 3 Feb 2024 52w to 27 Jan 2024* 52w to 28 Jan 2023 (restated)(1) Change (52v52)
(unaudited) (unaudited) (unaudited)
Revenue 10,542.0 10,397.2 10,125.0 2.7%
Gross margin 47.9% 48.0% 48.2% (20)bps
Operating profit before adjusting items* 979.9 973.9 1,060.3 (8.1)%
Operating margin before adjusting items* 9.3% 9.4% 10.5% (20)bps
Profit before tax and adjusting items* 917.2 912.4 991.4 (8.0)%
Adjusted basic earnings per share* (p) 12.14 13.39 (9.1)%
Net cash before lease liabilities* at period end 1,032.0 1,469.3
Statutory measures (53v52)
Revenue 10,542.0 10,125.0 4.1%
Operating profit 927.2 806.0 15.0%
Net financial expense and impairment loss on financial assets (116.0) (319.3) (63.7)%
Profit before tax 811.2 486.7 66.7%
Basic earnings per share (p) 10.45 3.65
Dividend per share (p) 0.9 0.8 12.5%
(1)Explanations for restating FY23 numbers can be found in Note 15 of this
announcement and Note 39 to the Consolidated Financial Statements
Throughout this release,'*' indicates the use of Alternative Performance
Measures. Please refer to pages 56 to 62 for the further information including
reconciliations to statutory measures.
Financial highlights
· Organic sales growth* of 9.0%, Premium Sports Fashion organic
sales growth* of 10.9% and like-for-like sales growth* of 3.8%
· Revenue growth* of 2.7% to £10,397.2m, after disposal impact
· Gross margin of 48.0%, down slightly on prior period reflecting
elevated market promotional activity during peak trading
· Profit before tax and adjusting items* for the 53-week period of
£917.2m down 7.5%, reflecting continued investment in people, stores, systems
& supply chain
· Profit before tax, for the 53-week period, of £811.2m, up 66.7%
due to a reduction of £398.7m in adjusting items*
· Adjusted basic earnings per share* down 9.1%
· Net cash before lease liabilities* of £1,032.0m, down on prior
period due mainly to acquisitions of ISRG & MIG, & increased capital
expenditure* of £539.7m, in line with our strategy & delivering strong
returns
· Proposed final dividend of 0.6p; total proposed dividend up 12.5%
to 0.9p
· Q1 performance in line with expectations and maintaining full
year profit before tax and adjusting items guidance of £955m-£1,035m
Strategic highlights
· JD Brand First
o Opened over 200 new JD stores; plan for over 200 new JD stores in FY25
o New stores exceeding internal sales expectations by 20% on average &
delivering payback of less than our three-year internal target
· Complementary Concepts
o Simplified the Group through acquiring non-controlling interests of ISRG
& MIG, & disposing of majority of non-core businesses
o Announced proposed acquisitions of Courir in Europe &, after the
period end, of Hibbett, Inc. in North America
· Beyond Physical Retail
o New distribution centre in Heerlen (Netherlands) began operations
o New website platform rollout from FY25
· People, Partners & Communities
o Investment in people of over £70m, in addition to minimum and living wage
increases
o Strengthened the management team; continued to invest in governance &
control environment
o Relaunched the JD Foundation
o Maintained strong Carbon Disclosure Project climate change ratings
Enquiries:
JD Sports Fashion
Plc Tel:
0161 767 1000
Régis Schultz, Chief Executive Officer
Dominic Platt, Chief Financial Officer
Mark Blythman, Director of Investor Relations
Advisors
Bank of America - Antonia Rowan
Tel: 0207 628 1000
Peel Hunt LLP - Dan
Webster
Tel: 0207 418 8869
FGS Global - Rollo Head, Jenny Davey, James Thompson
Tel: 0207 251
3801
Cautionary note regarding forward-looking statements
This announcement contains certain forward-looking statements relating to
expected or anticipated results, performance or events. Such statements are
subject to normal risks associated with the uncertainties in our business,
supply chain and consumer demand along with risks associated with
macro-economic, political and social factors in the markets in which we
operate. Whilst we believe that the expectations reflected herein are
reasonable based on the information we have as at the date of this
announcement, actual outcomes may vary significantly owing to factors outside
the control of the Group, such as cost of materials or demand for our
products, or within our control such as our investment decisions, allocation
of resources or changes to our plans or strategy. The Group expressly
disclaims any obligation to revise forward-looking statements made in this or
other announcements to reflect changes in our expectations or circumstances.
No reliance may be placed on the forward-looking statements contained within
this announcement.
Presentation of results
The presentation to analysts will take place at 0900 (BST) on 31 May 2024. To
register for the live webcast of this presentation, please use the following
link: https://brrmedia.news/JD_FY_24 (https://brrmedia.news/JD_FY_24)
Financial calendar
27 June 2024: AGM
August 2024: Q225 trading update
26 September 2024: H125 results
November 2024: Q325 trading update
January 2025: Q425 trading update
About JD Sports Fashion Plc
Founded in 1981, the JD Group ('JD') is a leading global omnichannel retailer
of Sports Fashion brands. JD provides customers with the latest sports fashion
through working with established and new brands to deliver products that our
customers most want, across both footwear and apparel. The vision of JD is to
inspire the emerging generation of consumers through a connection to the
universal culture of sport, music and fashion. JD focuses on four strategic
pillars: JD Brand First, first priority, first in the world; leveraging
Complementary Concepts to support JD Group global expansion; moving Beyond
Physical Retail by building the right infrastructure and creating a lifestyle
ecosystem of relevant products and services; and doing the best for its
People, Partners and Communities. JD is a constituent of the FTSE 100 index
and had 3,317 stores worldwide at 3 February 2024.
Chief Executive Officer's Review
In the period, we once again outperformed a challenging and volatile market
with organic sales growth* of 9%, broadly in line with our objective to
deliver double digit growth, and organic sales growth* in Premium Sports
Fashion of 11%, ahead of our objective. Our financial strength was highlighted
by the investment in opening over 200 new JD stores in the period, in line
with our plans, and the proposed acquisitions of Courir, announced in July
2023, and Hibbett, Inc. ('Hibbett'), announced after the period end in April
2024.
We achieved good progress in the first year of our five-year strategic plan
across the four pillars of JD Brand First, Complementary Concepts, Beyond
Physical Retail and People, Partners and Communities. Our drive to deliver
this plan is unrelenting, exhibited most recently with the proposed
acquisition of Hibbett in the key North American market. Hibbett will be one
of our Complementary Concepts in North America, alongside Shoe Palace and
DTLR, supporting the nationwide, mall-led growth opportunity in the US for the
JD brand, with more regionalised growth in local communities. We are excited
by the opportunities Hibbett will bring to our North America business.
We again made significant investments in our people, our governance and our
control environment to ensure we have a strong platform for long-term growth:
we've invested over £70m in our people through levelling up and increasing
pay across our workforce, in addition to minimum and living wage increases; we
are strengthening our cyber security and improving the quality of our
operating systems platform; and we are ensuring we have a more efficient
supply chain, reflecting the changing global business mix, both by geography
and by sales channel. These investments are the right choices for the business
but have weighed on profit progression in the period.
I am confident that the global sportswear market, and in particular, the
athleisure space within it, has many years of structural growth ahead of it,
with favourable trends like casualisation and active lifestyles continuing.
Euromonitor(1) is forecasting that the sportswear market will achieve value
growth of 6.6% per year from 2023 to 2028, on average. This would take the
total value of the market from $396bn in 2023 to $544bn in 2028. We believe
that through our growing brand presence, our industry-leading buying and
merchandising team, our powerful brand partner relationships and both our
strong balance sheet and cash generation capability, we will outperform the
market and deliver double digit market shares in all our key markets.
Performance
In the 52 weeks to 27 January 2024, we achieved revenue* of £10,397.2m, 2.7%
up on the comparative 52-week period, in what ended up being a very
challenging market. In constant currency, sales growth* was 2.9%. Revenue
growth* was impacted negatively by disposals made during the period.
Like-for-like ('LFL') sales growth* was 3.8% and there was a 5.2% benefit from
new stores, leading to organic sales growth* of 9.0%. This organic sales
growth* exceeded estimated market value growth(1) of 6.3% in the period,
meaning we outperformed the market organically and we increased our share of
the global sportswear market by 10 basis points to 3.4%.
Region(2) - From a geographical point of view, all regions grew revenue in the
period other than the UK, which was impacted principally by non-core
divestments made over the last two years. UK revenue declined 8.3% to
£3,510.2m. Europe revenue increased 16.3% to £3,093.5m, North America
revenue increased 8.4% to £3,413.5m and Asia Pacific revenue increased 7.5%
to £524.8m. Growth in our newer markets has resulted in a better business
balance geographically with the UK generating 33% of revenue, North America
32%, Europe 29% and Asia Pacific 5%.
Channel(2) - Our retail stores grew revenue by 8.9% to £7,956.6m with our
online channel declining by 7.6% to £2,350.3m, reflecting the continued shift
back to pre-pandemic online participation and our investment in stores. As a
result, stores now represent 76% of our revenue and online is 22%, with other,
mainly gym memberships, outdoor living equipment and some wholesale revenue,
at 2%. With our focus on customer satisfaction, we are increasingly channel
agnostic, meaning we don't mind where a sale is made - bought in store, bought
online and delivered to home, or bought online and delivered to store.
Category(2) - Footwear continued to perform strongly with revenue growth of
8.2% to £5,920.4m, while apparel revenue, impacted by the milder
Autumn/Winter weather, declined 4.3% to £3,408.4m. Accessories revenue grew
by 6.4% to £669.5m while other revenue, which includes outdoor living
equipment, delivery income and gym memberships, grew 17.3% to £543.7m. This
means we continue to build a good mix of products delivering a 'head-to-toe'
shopping opportunity with footwear at 56%, apparel at 32% and accessories at
6% of revenue.
We ended the period with 3,317 stores worldwide, 73 fewer than at the start of
the period, due mainly to the divestment of non-core businesses in the UK, our
planned withdrawal from South Korea and the bankruptcy of the SUR business in
the Netherlands, where 72 stores closed.
Gross margin was 48.0%, down slightly on the prior period, with a positive mix
benefit from the strong organic sales growth* of the JD brand offsetting
broadly the impact from the elevated market promotional environment we
experienced mainly in Q4, specifically through the peak trading period in
December.
Operating costs before adjusting items* were 5.1% up on the prior period as we
accelerated our operating cost investment in people, systems, supply chain and
new stores. In addition to the strong growth in minimum and living wages
across a number of our markets, we invested £70m in our people, including
removing age banding in the UK, and we are seeing the benefits of this
investment through more productive teams and lower colleague turnover in our
stores. Further, there were costs associated with investments we are making in
stores, distribution centres ('DC') and systems in anticipation of generating
the benefits from higher sales and a more efficient supply chain. As a result
of these investments, operating profit before adjusting items* was down 8.1%
to £973.9m and the operating margin before adjusting items* was 9.4%, down
from 10.5% in the prior period.
Profit before tax and adjusting items* was £912.4m, down 8.0%, and in line
with the revised guidance given in January which was on a 53-week basis. This
was lower than we anticipated at the half year due to lower revenue in the
second half of the period combined with continued cost investment for future
growth. Profit before tax for the 53-week period to 3 February 2024 was up
66.7% to £811.2m due to a lower level of adjusting items* compared to the
prior period.
Adjusted basic earnings per share* was 12.14p, 9.1% lower than the prior
period due to lower profit before tax and adjusting items* and the increase in
the adjusted effective tax rate*. Offset partially by an in-year benefit to
adjusted basic earnings per share* from the buying out of the non-controlling
interests ('NCI') in ISRG and MIG.
At the end of the period, we had net cash before lease liabilities* on our
balance sheet of £1,032.0m. This reflects a cash outflow in the period of
£437.3m, due mainly to mergers and acquisitions expenditure of £611.0m
following the acquisitions of the ISRG and MIG NCIs and an increase in cash
capital expenditure of £180.4m as we stepped up our store opening programme
and continued to invest in strengthening our operational efficiency.
Reflecting the Group's performance, our continued strong operating cash
generation and the Board's confidence in our long-term growth strategy and
prospects, the Board is proposing a final dividend of 0.6p per ordinary share.
This maintains the 1/3:2/3 split between the interim and proposed final
dividend that was guided to at our half year results. This proposed final
dividend takes the proposed total dividend for the period to 0.9p per ordinary
share, an increase of 12.5% on the prior period. The proposed final dividend
will be paid on 12 July 2024 to all shareholders on the register at 14 June
2024.
(1)Source: Euromonitor International Limited, Apparel & Footwear 2024
edition, retail value RSP incl sales tax, US$, year on year exchange rate,
current terms
(2)The analysis of sales performance and breakdown by region, channel and
category is on a 53-week basis, including the benefit of the 53(rd) week
Strategy Update
Our vision is to be the leading, global Sports Fashion powerhouse. Our
five-year strategic plan, launched at our Capital Markets Day in February
2023, is the roadmap to achieving this vision. The plan has four key strategic
pillars: -
1. JD Brand First - increasing the JD store footprint globally
2. Complementary Concepts - strengthening our complementary sports
fashion offers
3. Beyond Physical Retail - building a stronger platform for long-term
growth
4. People, Partners and Communities - being the best for our people,
our partners and our communities
We have made good progress on all key elements of our five-year plan to become
the leading, global sports fashion powerhouse retailer. In the period, we
opened over 200 new JD stores across 23 countries; our other US fascias
performed well and continue to give us reach across the US, the world's
biggest sportswear market; we launched our JD STATUS loyalty programme in the
UK; we opened our new DC in Europe; and we moved closer to rolling out our new
Group HR Information System (HRIS).
We remain focused on delivering our 'triple-double' of double-digit sales
growth(3), double-digit operating margin(3) and double-digit market shares in
our key markets over the course of the plan. In respect of our target for
double-digit sales growth(3), we made a good start in the first year,
delivering organic sales growth* of 9.0% in what ended up being a challenging
and volatile market. With the positive impact from the proposed acquisitions
of Courir and Hibbett to come, we remain confident of achieving this target.
On operating margin*, our target is to reach and maintain a double-digit
operating margin(3) within the course of the plan. The operating margin* was
lower this period than in the base period, reflecting the necessary investment
in our operating platforms for long-term growth.
(3)Sales growth is measured using organic sales growth and operating margin is
measured using operating margin before adjusting items*. These terms are
defined in the Alternative Performance Measures section on pages 56 to 62.
JD Brand First
The JD brand is our priority and we have three growth pillars for our JD Brand
First strategy; accelerating the opening of, and conversion to, JD stores in
North America; accelerating the opening of, and conversion to, JD stores in
Europe; and expanding the JD brand further by entering new markets through
either acquisition or franchise. There is significant 'white space' for the JD
brand to grow in North America, Europe and Asia Pacific. Accordingly, we
anticipate the JD store opening programme will contribute around 5%pts of new
space each year through the course of the five-year strategic plan.
This financial period saw an acceleration of our JD store opening programme.
In total, we added 216 new JD stores in the period, constituting 157 new
stores and 59 conversions from other brands, mainly Finish Line in the US, as
planned. We opened in 23 countries across all our key markets and launched the
brand in three new markets - Croatia, Cyprus and Slovakia - which took the
total number of countries with a JD store to 30 around the world. Return on
investment for our JD store opening programme remained ahead of expectations
with an average payback of less than three years and new JD store uplifts are
more than 20% ahead of expectations.
There continues to be good momentum in North America where we converted 57
Finish Line stores to the JD fascia and we opened a further 40 new JD stores
across the US and Canada. New locations for the JD brand included the Aventura
mall near Miami, the third largest in the US, the American Dream mall in New
Jersey, the Fashion Show mall in Las Vegas and at Laval in Montreal, Canada.
In Europe, we opened 84 new JD stores, including the stores we acquired from
Conbipel in Italy and the majority of the ex-GAP stores we acquired in and
around Paris. We opened our first stores in Croatia, Cyprus and Slovakia, and
we also opened new stores in European cities such as Athens, Bucharest and
Vienna. After the period end, we opened our new flagship store on the Champs
Elysees ahead of the 2024 Paris Olympics, which will help to grow global
awareness of the JD brand. During the period, we acquired the NCIs in Iberia
via ISRG and Central/Eastern Europe via MIG, which will strengthen our
foothold in these geographies and accelerate our European expansion of the JD
brand. We have identified between 40 and 50 stores for conversion to JD from
within the ISRG and MIG businesses and we expect to complete these conversions
over the course of the next 24 months.
In UK/ROI, the main strategic focus continues to be on improving locations or
store size in existing cities and towns. During the period, we opened 21 new
stores and closed 13, therefore growing our store portfolio by a net eight
stores. Highlights included the relocation and upsizing of the Birmingham
Bullring store and new stores in Coventry and Bedford. After the period end,
we opened our new flagship store at Stratford in London.
In Asia Pacific, we opened 14 new JD stores but closed 13, including 12 due to
our strategic withdrawal from South Korea. We opened new stores in cities such
as Auckland, Bangkok and Kuala Lumpur and we finalised the acquisition of our
NCIs interests in south east Asia, which is helping us accelerate the growth
of the JD brand in these markets.
In addition to 'own store' growth, in July we signed our first franchise
agreement in the Middle East with Gulf Marketing Group ('GMG'). This agreement
has an initial target of 50 franchised JD stores by 2028 across UAE, Saudi
Arabia and Egypt. After the period end, the first store was opened in Bahrain.
Also, after the period end, we signed our second franchise agreement, this
time in South Africa, with The Foschini Group and we are targetting over 40
franchised stores for this region over the next five years.
Importance of Complementary Concepts
Our Complementary Concepts allow us to widen our customer base and sharpen our
customer focus. We have four key pillars within this element of our strategy:
growing our community brands within North America; acquiring Courir to develop
a new, complementary sports fashion offer; optimising the profitability of the
ISRG and MIG businesses within Europe; and divesting non-core fascias within
the Group. In addition, we leverage our complementary brands at the top of our
brand pyramid, such as Size? and Footpatrol, by providing an environment for
seeding new product ideas, launching exclusive ranges and introducing new
brands to the Group.
The US market is segmented between malls and neighbourhoods. While the JD
brand is focused on malls, our neighbourhood community fascias of Shoe Palace
and DTLR ensure that the Group also has a strong community proposition as
well. During the period, we opened 14 new stores across these fascias in the
US, but closed 10 as we improved the overall strength of the store portfolio.
In the new financial year, we plan to accelerate the opening programme to
around 30 new community stores.
The acquisition of Courir has proved to be a lengthy process and it remains
subject to review by the European Commission. Once the process is concluded,
Courir will add a new dimension to our brand portfolio with its stronger
female product range and customer base. This will not only complement our
existing proposition in Europe but also provide learnings to the JD brand and
other brands within the Group.
We simplified the Group further through the acquisition of the NCIs in ISRG
and MIG in the period. This allowed us to accelerate our store conversion
plans in these markets, as well as placing the loss-making SUR business into
bankruptcy. We continued to reduce our portfolio of businesses through the
disposals of brands such as Focus, GymNation and Hairburst. Following the NCI
buyouts, we will improve the profitability of both ISRG and MIG by optimising
the organisational structures and more closely integrating these businesses
into the Group.
After the period end, we announced the proposed acquisition of Hibbett, Inc.
for £899m. Hibbett is located in Birmingham, Alabama, it has 1,169 stores
across its Hibbett and City Gear retail fascias, and it has strong
relationships with the key brand partners in North America. This acquisition
is in line with our strategic priorities and it is an important transaction
for our strategic and financial development. Strategically, Hibbett will
strengthen our Complementary Concepts division, enhance our North America
presence and provide a stronger platform for the future organic growth of the
Group in the region. Financially, it accelerates our North America growth
plans and will be earnings enhancing from the first full year
post-acquisition. Before completion, which we anticipate will be in the second
half of 2024, the transaction will need Hibbett stockholder approval and US
anti-trust clearance.
JD Beyond Physical Retail
Having expanded both our physical and digital channels successfully in recent
years, we are now focusing on creating a single omnichannel experience. We are
agnostic about which channel a sale is made in. The technology investments we
are making, including loyalty, will make our proposition more omnichannel and
give us a better single view of the customer. We believe that JD, as a brand,
is trusted by consumers and this relationship can be developed further to
create a lifestyle ecosystem of relevant products and services.
There are five areas of focus: replatforming our websites; strengthening our
cyber security; developing our omnichannel proposition further; developing our
loyalty programme; and improving the efficiency and effectiveness of our
supply chain.
We are planning to go live in FY25 with our replatformed websites, starting
with Italy as our proposed first go-live market. For all companies,
cyber-crime is a growing global threat and we continue to invest in our cyber
security. We have recruited a Chief Information Security Officer to lead our
cyber programme.
Our click and collect trial in France is providing learnings for the future
and we had over 100 stores live by the period end. We are now building out a
roadmap for future click and collect markets in Europe.
Our JD STATUS loyalty programme in the US now has 5.1m active members and,
following a successful trial, we rolled out JD STATUS across the UK during the
period. By the period end, we had 800k app downloads in the UK, of which
75-80% were active users. The average transaction value of JD STATUS members
in the UK is over 40% higher than non-members. Members of JD STATUS and Nike
Connected will soon start to benefit from improved targetting of offers and
other benefits as the two programmes improve their connectivity going forward,
and we will launch JD STATUS into European markets during the new financial
year.
We continued to make progress on our UK/European supply chain optimisation
with the Heerlen DC opening manually for selected brand partners and own
brand. Going forward, we will automate Heerlen, enabling it to serve as the
logistics hub for the Group across Continental Europe.
People, Partners & Communities
We want to provide our colleagues with the best opportunities to develop their
individual careers and to support them in achieving their ambitions, to be the
best partner for the brands and the best partner for the communities where we
operate. Improving ESG performance is an integral part of our Group strategy.
As a FTSE 100 Company, we recognise that our scale enables us to make
positive, lasting changes.
We are currently focused on: improving our people systems functionality;
creating a target organisation for future growth and people development;
developing our key partner programmes; and continuing to make a positive
contribution to the communities where we operate.
Our people are at the heart of our business. We are investing in a new global
HRIS which will ensure a more seamless HR experience for our people. We will
start going live with the new system in 2024. We have invested £70m in our
people in the period including through the removal of age wage banding in the
UK, improved bonus and conditions for UK store managers and salary increases.
As well as these investments, there have also been mandatory minimum and
living wage increases. This helps to ensure we recruit and retain the best
talent. In the UK, following this investment, we have seen a significant
reduction in colleague turnover.
We strengthened our global leadership team with the hiring of Dominic Platt as
the Group's new Chief Financial Officer (CFO) and Dominic has made a strong
contribution to the Group in his first few months.
Our commitment to our community is showcased through our ongoing partnership
with the JD Foundation and various community support programmes across the
regions, such as the Shoe Palace 'Believe to Achieve' programme. The JD
Foundation strategy is evolving to focus on social mobility, building stronger
youth communities and transforming young people's lives through opportunities,
engagement and social change. 60% of our employees are under 25 and 87% are
under 35.
We are very proud of our ongoing climate achievements which include: achieving
an 'A-' 'Climate Change' grade, ahead of the UK retail sector average, from
the Carbon Disclosure Project (CDP) for the fourth successive year; achieving
a 'B' grade for CDP Water Security, also ahead of the UK retail sector
average; sourcing 95% of cotton for our private label products via the 'Better
Cotton' initiative; and retaining our 'Zero Waste to Landfill' accreditation
at our largest UK and European distribution and office locations.
Q125 Trading Update
Trading in the 13 weeks to 4 May 2024 was in line with our expectations. LFL
sales* were down 0.7% against a strong comparative of 14.5% in Q1 last year
and organic sales growth* was 4.9% against a comparative of 19.7% in Q1 last
year. Promotional activity in the market remained elevated in Q125 across all
regions. Regionally, we achieved LFL sales growth* in both Europe and North
America with Asia Pacific down 0.1% (against a 22.5% comparative). In the UK,
our continued promotional discipline, particularly in the online channel, and
a tough comparative from Q1 last year, led to LFL sales* being, down 6.4%. The
UK therefore held back the JD fascia overall, although LFL sales growth* was
achieved in our complementary fascias in North America and in our Sporting
Goods fascias.
Organically, reflecting the strength of our JD store rollout programme, both
Europe and North America achieved double-digit organic sales growth* with Asia
Pacific delivering high single-digit growth.
Q125 LFL sales growth* Organic sales growth*
(1)UK (6.4)% (5.8)%
(1)Europe 1.6% 10.8%
North America 2.0% 8.2%
Asia Pacific (0.1)% 10.1%
Group (0.7)% 4.9%
(1)From FY25, we will move to new segmentation, which includes moving the
reported sales from the Republic of Ireland from UK/ROI to Europe. This new
segmentation is detailed within the CFO statement.
Gross margin was 48.2%, in line with the prior period, reflecting our margin
discipline through Q1, and in line with our expectations.
We are maintaining our full year profit before tax and adjusting Items*
guidance of £955m-1,035m. This includes a c.£55m annual increase, announced
at our March update, from the accounting policy change to include amortisation
of acquired intangibles as an adjusting item from FY25 onwards.
We will release our Q2 trading update in August 2024.
Régis Schultz
Chief Executive Officer
31 May 2024
Chief Financial Officer's Statement
Financial Performance
FY24 is a 53-week period ended 3 February 2024.
A number of prior period adjustments have been identified during the course of
the audit that has led to a restatement of the comparative period. For more
details on prior period adjustments see Note 15 of this announcement and Note
39 to the accounts. These findings reinforce the need to continue our
programme to improve the effectiveness of our internal controls over financial
reporting.
The comparative period is 52 weeks to 28 January 2023. To aid comparability,
the headline results, associated commentary and percentage changes are
presented on an unaudited 52-week basis unless otherwise stated.
FY24 FY23 (restated)(1) Change
(unaudited)
exclude
£m 53 weeks 53(rd) week* 52 weeks* 52 weeks (52v52)
Revenue 10,542.0 (144.8) 10,397.2 10,125.0 2.7%
Gross profit 5,048.0 (61.7) 4,986.3 4,877.6 2.2%
Gross margin 47.9% 42.6% 48.0% 48.2% (20)bps
Operating costs before adjusting items* (4,068.1) 55.7 (4,012.4) (3,817.3) 5.1%
Operating profit before adjusting items* 979.9 (6.0) 973.9 1,060.3 (8.1)%
Operating margin before adjusting items* 9.3% 9.4% 10.5% (111)bps
Net financial expense and impairment loss on financial assets * (62.7) 1.2 (61.5) (68.9) (10.7)%
Profit before tax and adjusting items * 917.2 (4.8) 912.4 991.4 (8.0)%
Adjusting items * (106.0) (106.0) (504.7)
Profit before tax 811.2 (4.8) 806.4 486.7 65.7%
Throughout this release,'*' indicates the use of Alternative Performance
Measures. Please refer to pages 56 to 62 for further information including
reconciliations to statutory measures.
1.A prior period adjustment of £37.9m has been recorded impacting the
classification of marketing income from operating costs before adjusting
items* to Gross profit. This has increased gross margin by 40bps compared to
the prior period reported figure. Further details are included in Note 39 to
the Consolidated Financial Statements, which also explain a net £45.8m
increase to prior period reported adjusting items and profit before tax.
Consolidated Income Statement
Revenue*
Revenue* for the Group increased 2.7% to £10,397.2m (2023: £10,125.0m).
Sales growth* in constant currency was 2.9%.
Organic sales growth* was 9.0% and this comprised 3.8% like-for-like ('LFL')
sales growth* and 5.2% sales growth from net new space, which is not LFL
period-on-period ('non-LFL'*).
The remaining difference between organic sales growth of 9.0% and sales growth
in constant currency of 2.9% is the impact of disposals.
Gross Margin
Total gross margin was down slightly at 48.0% (2023: 48.2%). The increase in
JD fascias driving a higher proportion of sales through our store channel, as
opposed to online, and the higher gross margin from the JD fascia growth,
offset largely the impact of elevated market promotional activity,
particularly during peak trading.
Operating Profit Before Adjusting Items*
Operating profit before adjusting items* was £973.9m, being 8.1% down on the
previous period. The operating margin before adjusting items* was 9.4%, down
111bps on the previous period. Overall, operating costs before adjusting
items* grew 5.1% to £4,012.4m driven by selling & distribution expenses
of £3,573.1m, up 6.5%, as we continued to invest in our operating platforms
for future, long-term growth. This included operating cost investment in our
people, our supply chain (including some double running costs in the period in
new distribution centres), our systems and new stores.
A breakdown of operating costs before adjusting items* can be seen in the
table below.
£m/52 weeks FY24* FY23 Change
Restated(1)
Selling and distribution expenses (3,573.1) (3,353.5) 6.5%
Administrative expenses before adjusting items (476.9) (497.3) (4.1)%
Share of profits of equity-accounted investees 7.5 4.9 53.1%
Other operating income 30.1 28.6 5.2%
Operating costs before adjusting items* (4,012.4) (3,817.3) 5.1%
(1)A prior period adjustment of £37.9m has been recorded impacting the
classification of marketing income from operating costs before adjusting
items* to gross profit.
Net financial expense and impairment loss on financial assets* (53-week basis)
Net financial expense and impairment loss on financial assets before adjusting
items* in the period was £62.7m, which is £6.2m lower than the prior period.
Financial income rose by £30.8m compared with the prior period due to higher
interest rates earned on our cash balances. Financial expenses before
adjusting items increased by £24.6.m to £101.9m, the majority of which is
lease liabilities expense under IFRS16 with the increase due mainly to the
change in the mix of our property portfolio during the period, as we opened
249 high quality new stores and disposed of 322 non-core stores.
Profit Before Tax and Adjusting Items*
Profit before tax and adjusting items* for the 53 weeks to 3 February 2024 was
£917.2m. For the 52 weeks to 27 January 2024, profit before tax and adjusting
items* was £912.4m, which was 8.0% behind the previous period.
Adjusting Items
Adjusting items* for the 53 weeks to 3 February 2024 was a net charge of
£106.0m (2023: net charge of £504.7m), as detailed in the table below.
£m 53 weeks to 3 February 2024 52 weeks to 28 January 2023 Restated(1)
Impairment of tangible and intangible assets and investments 39.2 137.2
Acquisition related costs: Courir 10.8 -
Loss on divestments and restructuring of group companies: principally sale of 38.3 129.6
non-core fashion businesses
Gain arising on deconsolidation: ISRG Group - SUR bankruptcy (36.1) -
Deferred consideration charge / (release) 0.5 (12.5)
Adjusting items within administrative expenses 52.7 254.3
Impairment of loans not recoverable: ISRG Group - SUR bankruptcy 57.9 -
Put and call options: movement in present value of put and call options (5.5) 250.4
Impairment of loans not recoverable from non-consolidated joint venture 0.9 -
Adjusting items within net financial expense 53.3 250.4
Adjusting items* 106.0 504.7
(1)Please refer to Note 39 of the Consolidated Financial Statements for
further details of the restatement
The impairment of tangible and intangible assets and investments in the
current period relates to the impairment of goodwill, fascia name and assets
arising on the acquisition of Swim! (£19.9m), goodwill impairment prior to
the divestment of GymNation (£7.9m), goodwill impairments of the Go Outdoors
fascia (£8.8m) and impairment of the goodwill and fascia names on three
non-material acquisitions (£2.6m).
Acquisition-related costs of £10.8m are in respect of the Courir acquisition
which remains subject to review by the European Commission and, as at the date
of this report, has not been concluded.
The Group incurred £38.3m of loss on divestments and restructuring of group
companies. Following the Group's announcement in December 2022 to simplify its
non-core fashion offering, the group has incurred losses on divestments of
£31.4m. The most significant of these was Focus (£23.5m). Restructuring
costs of £6.9m were incurred across certain businesses.
Costs were incurred during the period following the acquisition of the 49.99%
non-controlling interests ('NCI') in Iberian Sports Retail Group (ISRG). These
costs enabled the expansion of the JD brand across Iberia to be accelerated
and improve the operating efficiency of this business. In addition, a
strategic review of the ISRG business was undertaken, which resulted in the
decision to declare Sports Unlimited Retail ('SUR'), ISRG's Dutch subsidiary,
bankrupt. This resulted in ISRG incurring net costs of £21.8m, being the
impairment of loans not recoverable (£57.9m) and a subsequent gain arising on
the deconsolidation of SUR from ISRG (£36.1m). The remaining £0.9m relates
to other impairments.
The £5.5m credit in the present value of the put and call options reflects
changes in the present value of the future buyouts of NCIs and comprises
primarily Genesis Topco Inc (£19.3m credit) and Cosmos (£5.7m charge). The
credit on Genesis is driven by revised EBITDA projections for the business
reflecting trading in the 53-week period. In addition, there was a credit of
£3.9m in respect of the put option liability for ISRG and a £14.3m charge
was incurred during the 26-week period ended 30 July 2023 in respect of the
put option valuation of Marketing Investment Group S.A ('MIG'). The NCIs in
ISRG and MIG were acquired during the second half of the accounting period
(see Note 11). There are further, smaller movements on other put and call
options that total a credit of £4.3m.
Operating Profit
On a 53-week basis, operating profit was £927.2m (2023: £806.0m), which is
an increase of 15.0%. This is due to a reduction in adjusting items* charged
within administrative expenses due to lower impairments of intangible assets
and investments, and lower losses on disposal of Group companies.
Profit Before Tax
On a 53-week basis, the profit before tax is £811.2m (2023: £486.7m). The
increase of £324.5m versus the prior period is due primarily to the reduction
in adjusting items of £398.7m, resulting mostly from the impact of movement
in present value of put and call options between periods, the loss on disposal
of group companies recorded in the prior period and the reduced level of
impairment charges compared to the prior period.
Income Tax Expense
The income tax expense for the 53-week period was £206.2m (2023: £214.2m).
The effective tax rate fell from 44.0% to 25.4% due primarily to the movement
in the value of the put and call valuations in the two periods. The £13.3m
credit in the current period is non-taxable and the £250.4m charge in the
prior period was not tax deductible.
The income tax expense before adjusting items* for the 53-week period was
£224.6m (2023: £216.4m). The effective tax rate before adjusting items* rose
from 21.8% to 24.5% due to the UK's mainstream corporation tax rate increasing
from 19% to 25% on 1 April 2023.
Profits Attributable to Non-Controlling Interests
The charge relating to NCIs fell £18.0m from £84.2m in FY23 to £66.2m in
FY24. This was due to the impact from the buyout of the 49.99% NCI in ISRG and
the buyout of the 40% NCI in MIG during the period. The only material NCI left
in the Group is the 20.0% in Genesis Topco Inc.
Earnings Per Share
On a statutory basis, basic and diluted earnings per ordinary share grew from
3.65p to 10.45p due to significantly lower adjusting items in the 53-week
period.
Adjusted basic earnings per ordinary share* fell 9.1% from 13.39p to 12.14p
due to lower profits in the 53-week period, reflecting the reduced profit
before tax and adjusting items* and the increase in the effective tax rate
before adjusting items*, offset partially by the benefit of the acquisition of
the NCIs in ISRG and MIG.
Segmental Report
Change
£m/52 weeks* Total Sports Fashion Outdoor Total Sports Fashion Outdoor
Revenue 10,397.2 9,844.8 552.4 2.7% 3.0% (2.1)%
Gross profit 4,986.3 4,752.1 234.2 2.2% 2.5% (2.2)%
Gross margin 48.0% 48.3% 42.4% (20)bps (20)bps flat
Operating costs before adjusting items* (4012.4) (3,771.1) (241.3) 5.1% 4.9% 8.2%
Operating profit/ (loss) before adjusting items* 973.9 981.0 (7.1) (8.1)% (6.0)% n/a
Operating margin before adjusting items* 9.4% 10.0% (1.3)% (111)bps (95)bps (420)bps
Net financial expense and impairment loss on financial assets before adjusting (61.5) (57.6) (3.9) (10.7)% (11.8)% 8.3%
items*
Profit /(loss) before tax and adjusting items* 912.4 923.4 (11.0) (8.0)% (5.7)% n/a
Number of stores 3,317 3,074 243 (2.2)% (2.1)% (3.2)%
A performance summary of the different sub-segments in the Group can be seen
in the table below.
Revenue* Operating profit / (loss) before adjusting items*
£m/52 weeks* FY24 FY23 Change FY24 FY23 Change
UK/ROI 2,661.0 2,597.6 2.4% 340.4 369.5 (7.9)%
Europe 1,759.7 1,385.8 26.9% 69.3 102.2 (32.2)%
North America 3,069.0 2,845.6 7.9% 317.1 340.2 (6.8)%
Asia Pacific 481.7 430.9 11.8% 69.2 66.6 4.0%
Premium Sports Fashion Total 7,971.4 7,259.9 9.8% 796.0 878.5 (9.4)%
Other Fascias 1,625.4 1,983.0 (18.0)% 136.6 135.5 0.8%
Other Businesses 248.0 317.8 (22.0)% 48.4 30.0 61.1%
Sports Fashion Total 9,844.8 9,560.7 3.0% 981.0 1,044.0 (6.0)%
Outdoor 552.4 564.3 (2.1)% (7.1) 16.3 n/a
Total 10,397.2 10,125.0 2.7% 973.9 1,060.3 8.1%
Sports Fashion
Our Sports Fashion segment generated 94.7% of Group revenue in FY24. On a
52-week basis*, revenue for this segment was up 3.0% to £9,844.8m with sales
growth* of 3.2% in constant currency. LFL sales growth* was 4.2% and organic
sales growth* was 9.7%. Gross margin was 48.3%, compared to 48.5% in the prior
period. Operating costs before adjusting items* increased 4.9% to £3,771.1m,
as we continued to invest for future growth, leading to operating profit
before adjusting items* being down 6.0% and an operating margin before
adjusting items* down 90bps to 10.0%. Profit before tax and adjusting items*
was £923.3m, 5.7% down on the previous period.
There were 3,074 stores at the end of the period, compared to 3,139 at the end
of the prior period, an overall reduction of 65 stores.
Premium Sports Fashion
Premium Sports Fashion generated 81.0% of Sports Fashion revenue in FY24. On a
52-week basis*, revenue was £7,971.4m, up 9.8% on the previous period, and
sales growth* of 10.6% in constant currency. LFL sales growth* was 4.4% and
organic sales growth* was 10.9%. Operating profit before adjusting items* was
down 9.4%, partly as a result of this sub-segment bearing the majority of the
investment costs for future growth.
UK/ROI - Premium Sports Fashion retail fascias grew revenue by 2.4% to
£2,661.0m on a 52-week basis with 2.3% sales growth* in constant currency.
LFL sales growth* was 0.5% and organic sales growth* was 2.3%. Operating
profit before adjusting items* in Premium Sports Fashion was down 7.9% to
£340.4m due partly to the UK elements of our increased investment in our
people, our supply chain (including some double running costs in FY24 in new
distribution centres) and our systems.
Europe - Premium Sports Fashion Revenue on a 52-week basis* grew 27.0% to
£1,759.7m with 25.3% sales growth* in constant currency. LFL sales growth*
was 10.5% and organic sales growth* was 25.3%. All major European countries
saw strong organic sales growth* with Italy, Portugal and Spain leading the
way. The conversion of 19 Conbipel stores in Italy to the JD brand helped to
drive the strong sales growth in the period. These conversions are trading
well and helped make Italy the fastest growing market for the JD brand in
Europe. Operating profit before adjusting items* was £69.3m, down 32.2%,
driven both by a reduction in gross margin following the elevated market
promotional activity, especially over the peak trading period, and operating
costs that rose ahead of revenue growth as we invested in growth. In addition,
there were pre-opening costs associated with the acquired Gap and Conbipel
stores in France and Italy respectively, and there were also additional supply
chain costs (including some double running costs in FY24 in new distribution
centres).
North America - Our market-leading proposition and continued sales
outperformance in North America is built upon larger and better-invested
stores, a broader sales mix and compelling brand partner relationships.
Premium Sports Fashion revenue on a 52-week basis* was up 7.9% to £3,069.0m
with 9.7% sales growth* in constant currency. LFL sales growth* was 3.9% and
organic sales growth* was 9.7%. All our North American fascias - JD/Finish
Line, DTLR and Shoe Palace - achieved strong organic sales growth* of at least
7%. North America operating profit before adjusting items* ended the period at
£317.1m, down 6.8%, driven by weaker gross margins reflecting the more
promotional peak trading season and investment in our future growth.
Asia Pacific - Premium Sports Fashion revenue on a 52-week basis* in Asia
Pacific grew by 11.8% to £481.7m with 17.9% sales growth* in constant
currency. LFL sales growth* was 12.5% and organic sales growth* was 24.4% with
all countries in strong growth. Operating profit before adjusting items* was
up 4.0% to £69.2m with strong sales growth* and good cost control offsetting
a lower gross margin year-on-year.
Other Fascias
Due primarily to the divestment of non-core fashion businesses in the UK and
the closing of the SUR business in the Netherlands, as we simplify and
strengthen the Group, revenue on a 52-week basis* in our other fascias was
down 18.0% to £1,625.4m with a 19.1% sales decline* in constant currency. LFL
sales growth* was 3.6% and organic sales growth* was 4.1%.
Europe, which represents 76% of Other Fascias, achieved revenue growth on a
52-week basis* of 4.8% with sales growth* of 2.0% in constant currency. LFL
sales growth* was 3.5% and organic sales growth* was 4.7%, led by Cosmos in
Greece with growth of 22.2%.
Operating profit before adjusting items* for Other Fascias was up 0.8% to
£136.6m, driven by the disposal of the loss-making SUR business.
Other Businesses
Revenue* on a 52-week basis decreased 22.0% to £248m due to the divestment of
non-core businesses such as Topgrade, Source Lab and Focus partially offset by
the growth in JD Gyms. In the period, we continued to roll out the JD Gyms
fascia, expanding our market-leading, premium low-cost gyms business further
across the UK. After opening eight new gyms in the period, including our first
in Northern Ireland, the Group operated from 85 sites in the UK. We plan to
maintain the momentum of our organic rollout in the future and plan to open a
further eight gyms in FY25. The non-core divestments, and the subsequent
increased contribution from the profitable JD Gyms, meant operating profit
before adjusting items* increased 61.1% to £48.4m.
Outdoor
Revenue* on a 52-week basis was £552.4m, which was 2.1% down on the previous
period. LFL sales* were down 2.6%, while organic sales* were down 2.1%.
Trading was impacted in the first half of the year by slower camping sales and
in the second half of the year by unseasonably mild weather which affected
sales of winter apparel and accessories.
Gross margin was in line with the previous period at 42.4% but the slightly
lower sales, combined with additional labour, warehousing and freight costs
through the period, led to a small operating loss before adjusting items* of
£7.1m.
We acquired the remaining shares in Tiso Group Limited from the founding
family, making the business 100% Group owned. To enhance our customer service
and efficiency further, we opened a dedicated B2C e-commerce fulfilment centre
at Trafford Park, enabling the existing large Distribution Centre in Cheshire
to focus solely on store replenishment. We also converted a Blacks store to
'George Fisher' to test a more premium outdoor offer and we have seen
encouraging initial trading.
Cashflow Statement
A summary cashflow showing how the change in cash and cash equivalents((1)) is
calculated, can be seen in the table below.
£m 53 weeks to 3 February 2024 52 weeks to 28 January 2023
(unaudited) (unaudited)
Profit before tax 811.2 486.7
Add back impairments of tangible, intangible assets and investments 39.2 137.2
Add back non-cash other adjusting items 69.2 367.5
Depreciation and amortisation of non-current assets 664.1 633.2
Change in working capital (197.0) (398.6)
Repayment of lease liabilities (400.0) (393.0)
Capital expenditure (539.7) (359.3)
Income taxes paid (208.6) (174.4)
Other (22.5) 15.0
Net cashflow before dividends, acquisitions and disposals* 215.9 314.3
Acquisition of NCI and cash consideration of disposals (611.0) (21.6)
Equity dividends paid (50.1) (24.8)
Dividends paid to NCI in subsidiaries net of dividends received (2.1) 0.6
Change in net cash and cash equivalents including foreign exchange losses(1) (447.3) 268.5
Cash and cash equivalents((1)) at start of the period 1,548.9 1,280.4
Cash and cash equivalents((1)) at end of the period 1,101.6 1,548.9
(1)Cash and cash equivalents equates to the cash and cash equivalents
presented in the Consolidated Statement of Cash Flows, as reconciled in Note
33 of the Consolidated Financial Statements
Profit before tax was £811.2m (2023: £486.7m). The increase of £324.5m on
the prior period was due primarily to the reduction in adjusting items of
£398.7m, resulting from the impact of movement in the present value of put
and call options between periods, the loss on disposal of group companies
recorded in the prior period and the reduced level of impairment charges
compared to the prior period.
These drivers of increased profit before tax are all non-cash charges and so
there are fewer non-cash adjustments for this period compared to the previous
period.
Total depreciation and amortisation for 53 weeks was £664.1m, up £30.9m or
4.9%, on the previous period, reflecting our increased investment programme.
This included a £19.0m increase in depreciation on property, plant and
equipment and a £14.9m increase in depreciation on right-of-use assets.
Amortisation of intangibles reduced by £3.0m.
There was an increase in working capital of £197.0m in the period. This was
due to an increase in inventory of £196.2m due to stock build ahead of new
store openings in the US JD business and slightly elevated levels of inventory
following the peak trading season.
Lease liability repayments increased 1.8% to £400.0m, as we continued to
improve the quality of our overall portfolio.
Capital expenditure in the period was £539.7m, up £180.4m on the previous
period. The increase was driven by the step up in new store openings in
support of our strategic plan to increase the number of JD brand fascias
around the world by over 1,200 by the end of FY28. Investment in new stores
and gyms was £308.5m, or 57% of the total capital investment. The other major
areas of investment were in our supply chain (£151.5m). as we developed new
distribution centre capacity in the UK and Europe, and in further systems
development (£79.7m).
We intend to maintain this level of capital investment in FY25 in line with
our strategic plan.
£m 53 weeks to 3 February 2024 52 weeks to 28 January 2023
Investment in physical retail fascias & gyms £308.5m £213.4m
Investment in logistics infrastructure £151.5m £80.8m
Investment in technology & other £79.7m £65.1m
Capital expenditure* £539.7m £359.3m
As a result, net cashflow before dividends, acquisitions and disposals* was
£215.9m in the period, compared to £314.3m in the previous period, with the
reduction primarily related to the increase in capital expenditure.
Acquisition of NCIs and cash consideration from disposals* was £611.0m, as we
bought out the NCIs in ISRG and MIG. In addition, there was a net cash outflow
from the continuation of our non-core divestment programme of £54.1m,
comprising disposals proceeds of £56.0m and cash transferred on sale of
£110.1m. There was also a deferred consideration paid of £5.1m.
Dividend payments more than doubled to £50.1m.
As a result, the change in net cash and cash equivalents in the period was an
outflow of £447.3m. Despite this reduction, we retained a strong balance
sheet as our closing cash and cash equivalents balance was £1,101.6m.
Acquisitions and Disposals
Our delivered Mergers and Acquisitions strategy in the period was focused on
business simplification through acquiring NCIs and divesting of non-core
businesses, facilitating the growth of both the JD brand and Complementary
Concepts, in line with JD's strategic pillars. We also entered into an
agreement to acquire Courir during the period, which would strengthen
Complementary Concepts within the Group.
· Iberian Sports Retail Group
We acquired the 49.99% NCI in ISRG in October 2023 from Balaiko Firaja Invest,
S.L. and Sonae Holdings, S.A. for a total cash consideration of €500.1m to
accelerate the expansion of the JD brand across Iberia and to improve the
operating efficiency of the business.
At the time of the acquisition, ISRG operated over 460 stores across the JD,
Sprinter, Sport Zone, Aktiesport, Perry Sport and Deporvillage fascias. Under
100% JD ownership, we have continued to deliver against the simplification
plans through (i) the bankruptcy of Sports Unlimited Retail B.V ('SUR'), which
operated Aktiesport, Perry Sport and Sprinter fascias in the Netherlands, in
December 2023, following several years of accumulated losses and financial
difficulty and (ii) post the period end, the disposal of ISRG's 50.1%
shareholding in Bodytone and purchase of the minority interests in Sport Zone
Canarias SL and JD Canary Islands Sports SL, taking full control of our
continued development in the territory.
· Marketing Investment Group
Similar to ISRG, we acquired the 40% NCI in MIG to accelerate the expansion of
the JD brand across Central and Eastern Europe and to improve the operating
efficiency of the business. At 30 December 2023, MIG operated over 400 stores
across 13 countries, including 23 JD stores.
· Groupe Courir ('Courir')
Following approval from the Courir employee works council, we entered into a
Share Purchase Agreement in June 2023 to acquire Courir, which has over 300
stores across six European countries under the Courir and NAKED fascias. This
acquisition remains subject to review by the European Commission and at the
period end had not concluded.
In addition to the above, we have also concluded two further acquisitions of NCIs, delivering against our JD First strategic pillar which is at the heart of our five-year growth plan, which include: -
· JD Sports Fashion Germany GmbH (JD Germany). In April 2023, we
concluded an acquisition of the 20% NCI in our JD Germany business.
· JD Sports Fashion SDN BHD (JD Malaysia). In August 2023, we
concluded an acquisition of the 20% NCI in our JD Malaysia business.
Also, in line with our strategic plan, we have continued to divest non-core
businesses. During the period, this included the disposals of various non-core
UK fashion brands including Focus (February/March 2023), Hairburst Group (July
2023) and GymNation (November 2023), among others.
Dividend and Capital Allocation Priorities
The Board recognises that the Group is cash generative and is committed to
further enhancing returns to shareholders.
In terms of capital allocation, our main priorities are to invest organically
in our business to drive our growth strategy, supported by a strategic
approach to mergers and acquisitions. These significant investments include
our ongoing capital expenditure plans, recent cash outlays such as the NCI
buyouts at ISRG and MIG, and future cash outlays such as the proposed Courir
and Hibbett acquisitions (see post balance sheet event note below for further
details) and then, further out, future costs associated with the potential
acquisition of the NCI in North America.
Dividend payments sit alongside maintaining a strong balance sheet and these
significant investments that we are making as we execute our strategy.
Consequently, the Board is proposing to increase the total dividend per share
for the period to 0.9p (2023: 0.8p). This results in a recommended final
dividend per share of 0.6p, reflecting a one-third/two-thirds split between
the interim and the final dividend, keeping the payment split in line with the
phasing of profit generated in the period.
Consolidated Statement of Financial Position
Total assets were broadly in line with the previous period end at £8,046.2m
(2023: £8,110.6m).
In terms of our assets, the main material line-item movements on the balance
sheet in the period were property, plant and equipment, which increased
£276.3m to £1,151.9m as a result of investment in stores, supply chain, and
systems. Inventory increased by £126.3m to £1,592.7m due to stock build
ahead of new store openings in the US JD business.
In terms of our liabilities, the main movement was a reduction of £294.9m in
our put and call option liabilities to £809.8m as a result of completing the
minority interest buyouts in the period of ISRG and MIG, and a £37.5m
reduction in the put and call option liability of Genesis TopCo Inc. The
reduction in liability on Genesis is driven by revised EBITDA projections for
the business reflecting trading in the 53-week period.
Cash and Cash Equivalents and Net cash Before Lease Liabilities*
Cash and cash equivalents were £447.3m lower at £1,101.6m reflecting
primarily the acquisition of the NCIs in ISRG and MIG.
Net cash before lease liabilities* reduced by £437.3m, to £1,032.0m, as a
result of the lower cash balances. Our interest-bearing loans and borrowings
remained low at £129.5m, £16.3m higher than the prior period.
Prior Period Adjustments
A number of prior period adjustments have been identified during the course
of the external audit. These non-cash adjustments primarily relate to the
treatment of put and call arrangements, IFRS 16 lease accounting, the
classification of supplier rebates, foreign currency translation of goodwill
and fascia names and the treatment of assets held for sale. For further
details see Note 15 of this announcement and Note 39 to the Consolidated
Financial Statements. The control findings and recommendations from the
external auditor are being incorporated into our on-going
programme to significantly improve the effectiveness of our internal
controls over financial reporting.
Post-Balance Sheet Events
On 7 March 2024, ISRG disposed of its 50.1% shareholding in Bodytone
International Sport SL. The shares were sold back to founder management.
On 8 March 2024, we signed a franchise agreement with Foschini Retail Group
(Pty) Limited to open over 40 franchised JD stores in South Africa over the
next five years.
On 18 March 2024, JD Gyms acquired the trade and assets of four 'Simply Gym'
sites from Bay Leisure Limited. The sites will be converted to JD Gyms under a
phased conversion programme in the coming months. In the meantime, they will
continue to trade under the Simply Gym banner with the support of the existing
management team.
On 8 April 2024, JD Spain Sports Fashion 2010 SL acquired the remaining 10%
shareholding in JD Canary Islands Sports SL and Sports Division SR, S.A.
(Sport Zone Portugal) acquired the remaining 40% shareholding in Sport Zone
Canarias (SL).
On 23 April 2024, we announced the proposed acquisition of Hibbett, Inc.
(Hibbett) for $1,083m (£878m). Hibbett is located in Birmingham, Alabama and
it has 1,169 stores across its Hibbett and City Gear retail fascias. This
acquisition is in line with our strategic priorities and it is an important
step for our strategic and financial development. Strategically, it will
strengthen our Complementary Concepts division, enhancing our North America
presence and providing a stronger platform for the future organic growth of
the Group in the region. Financially, it accelerates our North America growth
plans and will be earnings enhancing in the first full year following
acquisition. The proposed acquisition will be funded through a combination of
existing US cash resources of $300 million and a $1,000m extension to our
existing bank facilities. Before completion, which we anticipate will be in
the second half of 2024, the transaction requires Hibbett stockholder approval
and US anti-trust clearance.
Store Portfolio
We have continued to invest in growing the JD fascia across our key markets,
while also reducing the number of non-JD stores as we simplify the business
and pursue our JD Brand First strategy.
In Premium Sports Fashion, we opened 207 new stores, of which 181 were the JD
fascia. This excludes internal transfers between fascias. In addition, we
opened the following fascias: 11 Shoe Palace; nine Finish Line; three DTLR;
two Size and one Livestock. We also closed 86 stores, of which 34 were the JD
fascia, including 12 in South Korea where we exited the market completely.
Having opened the period with 1,922 stores, of which 1,073 were the JD fascia,
we ended the period with 2,047 stores, of which 1,254 were the JD fascia.
In Other Fascias, we opened 37 stores mainly spread across the Cosmos and
Sprinter within ISRG and in MIG. We closed 149 stores and disposed of 74
stores. Approximately half of the closures were from SUR, which was put into
bankruptcy in early December 2023, while the rest were spread across the ISRG
and MIG businesses, as well as Macy's concessions in the US. Early in the
period, we disposed of 66 UK stores with the majority coming from the Tessuti
fascia as part of the wider disposal of fashion fascias, and we disposed of
eight Sea Sports Fashion stores in South Korea as part of our exit from that
market.
In Outdoor, we opened five stores but closed 13, with the majority of closures
coming from the Blacks fascia. We also converted 12 Blacks stores into the Go
Outdoors Express fascia.
In addition, the Group now has 19 JD stores operating under joint venture
arrangements with partners in Indonesia and Israel.
After opening eight gyms in the period, the Group now has 85 gyms in its
principal UK market.
In terms of our store trading footprint, we added a net 180,000 sq.ft of
retail trading space in the period. This constituted 614,000 sq.ft of trading
space added in Premium Sports Fashion and 82,000sq.ft of trading space added
in Outdoor, less 516,000 sq.ft of trading space removed from Other Fascias. As
a result, our overall trading footprint per store grew from 4,010 sq.ft at the
start of the period to 4,153 sq.ft at the period end, an increase of 3.6%.
A summary of the store movements in the period is as follows: -
No. of stores Opening New stores Closures Disposals Transfers Closing
Premium Sports Fashion UK/ROI 444 21 (13) 0 2 454
Europe 435 84 (9) 0 2 512
North America 955 88 (51) 0 0 992
Asia Pacific 88 14 (13) 0 0 89
Total 1,922 207 (86) 0 4 2,047
Other Fascias UK/ROI 70 0 0 (66) (2) 2
Europe 850 37 (137) 0 (2) 748
North America 289 0 (12) 0 0 277
Asia Pacific 8 0 0 (8) 0 0
Total 1,217 37 (149) (74) (4) 1,027
Sports Fashion Total 3,139 244 (235) (74) 0 3,074
Outdoor 251 5 (13) 0 0 243
Group Total 3,390 249 (248) (74) 0 3,317
Adjustments to reported financials in the 28 March trading update
Following the completion of the FY24 year-end results process, we have made
changes to some of the numbers reported at the time of the 28 March trading
update. These can be seen in the table below.
Old New
LFL sales Mix of sales including sales taxes and excluding sales taxes (revenue) Revenue only
Excluded certain businesses All businesses included
All disposals and held-for-sale businesses included Only ongoing businesses included
Organic sales Excluded £55m revenue from multichannel delivery income Included as this is the ongoing basis for reporting
Gross margin Excluded revenue from multichannel delivery income in FY24 trading update Included, as this was already included in the FY23 comparative
Marketing rebates were included in marketing expenses Reclassified to cost of sales in current period and prior period results
restated
As a result, the changes to the FY24 numbers, as reported on 28 March 2024
are: -
1. LFL sales growth - from 4.2% to 3.8%
2. Organic sales growth - from 8.4% to 9.0%
3. Gross margin - from 47.3% to 48.0%
We have restated all quarterly LFL sales and organic sales for FY24 and this
restatement will be available via the FY24 results presentation on the company
website.
New Segmentation & Accounting Policy Changes
We announced at our 28 March 2024 trading update that we were introducing a
change to our segmental reporting structure from FY25 and an update to our
policy on Adjusting Items.
New Segmentation: this new structure aligns the financial reporting with the
principles of the strategic review announced in the Group's Capital Markets
Event on 2 February 2023. This is the level of information that will be
provided to the Chief Operating Decision Maker to enable the business to
operate and run the business going forward.
The Group's new operating and reportable segments under IFRS 8 ('Operating
Segments') are proposed to be: -
· JD
· Complementary Concepts
· Sporting Goods and Outdoor
· Other
As shown below, the Group has aggregated operating segments with similar
economic, brand or customer characteristics into these larger reportable
segments. In doing so, the Group has concluded that this aggregation is
consistent with the core principles of IFRS 8.
Operating and reportable segment Operating segment
JD JD: UK(1)
JD: Europe(2)
JD: Asia Pacific(3)
JD & Finish Line: North America(4)
JD Active(5)
JD Brand Builders(6)
Complementary Concepts Community(7)
Complementary(8)
Sporting Goods and Outdoor Sporting goods(9)
Outdoor(10)
Other Other(11)
(1)JD, Size?, Foot Patrol and Hip fascias in the UK. These fascias were all
included previously within the Sports Fashion reporting segment with JD, Size?
and Foot Patrol aggregated previously as 'Premium: UK & Republic of
Ireland' while Hip was included previously as part of 'Other: UK &
Republic of Ireland'.
(2)JD, Size? and Foot Patrol fascias in Europe inc. Republic of Ireland which
were previously presented as 'Premium: Europe' within Sports Fashion.
(3)JD fascia in the Asia Pacific region which was previously presented as
'Premium: Asia Pacific' within Sports Fashion.
(4)JD, Size? and Finish Line fascias in North America including the Finish
Line concessions in the Macy's department stores. These fascias were all
included previously within the Sports Fashion reporting segment with JD, Size?
and the Finish Line stand alone stores included previously as part of
'Premium: North America' while the Finish Line concessions in the Macy's
stores were presented previously as 'Other: North America'.
(5)JD Gyms and Swim! which were included previously as part of 'Other
Businesses' within Sports Fashion.
(6)Those non-retail businesses which develop and incubate brands largely for
the future benefit of the JD fascia. These businesses, which include 2Squared
and A Number of Names, were included previously as part of 'Other Businesses'
within Sports Fashion.
(7)DTLR and Shoe Palace fascias in the United States, which have a premium
sports brand proposition similar to JD but which are located largely in
neighbourhoods at the heart of the community as opposed to malls. These
fascias were included previously as part of 'Premium: North America' within
Sports Fashion.
(8)Those businesses, including Sizeer in Eastern Europe, which, while they may
sell a similar range of brands to JD, have a proposition and overall product
offer which is targeted at a different consumer. These businesses are all
currently based in Europe and were included previously as part of 'Other:
Europe' within Sports Fashion.
(9)Those businesses, including Sprinter in Spain, Sport Zone in Portugal and
Cosmos in Greece, whose proposition is more geared towards sports
participation as opposed to lifestyle. These businesses are all currently
based in Europe and were included previously as part of 'Other: Europe' within
Sports Fashion.
(10)The aggregation of the businesses which were presented previously as the
Outdoor reportable segment.
(11)Principally, the remaining branded fashion businesses in the UK, including
Mainline Menswear, which were included previously as part of 'Other: UK &
Republic of Ireland'.
Segmental Performance Summaries
The Group's profit before tax and adjusting items* for the last two financial
periods, under this new segmental structure, may be summarised as follows:-
Year to 28 January 2023
Full Year to 28 January 2023
FY23
£m/52 weeks Total JD Complementary Concepts Sporting Goods & Outdoor Other
Revenue 10,125.0 6,802.6 1,241.3 1,511.4 569.7
Gross profit 4,877.6 3,362.3 608.1 665.6 241.5
Gross margin 48.2% 49.4% 49.0% 44.0% 42.4%
Operating costs before adjusting items* (3,817.3) (2,541.1) (465.5) (592.4) (218.3)
Operating profit before adjusting items* 1,060.3 821.3 142.6 73.2 23.2
Operating margin before adjusting items* 10.5% 12.1% 11.5% 4.8% 4.1%
Net financial expense and impairment loss on financial assets before adjusting (68.9) (34.8) (19.0) (9.5) (5.6)
items*
Profit before tax and adjusting items* 991.4 786.5 123.6 63.7 17.6
Number of stores 3,390 1,802 830 690 68
Year to 3 February 2024
52 Weeks to 27 January 2024*
FY24
£m/52 weeks to 27 January 2024* Total JD Complementary Concepts Sporting Goods & Outdoor Other
Revenue 10,397.2 7,414.7 1,321.9 1,545.8 114.8
Gross profit 4,986.3 3,622.1 626.1 685.3 52.8
Gross margin 48.0% 48.9% 47.4% 44.3% 46.0%
Operating costs before adjusting items* (4,012.4) (2,902.9) (481.5) (639.1) 11.1
Operating profit before adjusting items* 973.9 719.3 144.6 46.2 63.8
Operating margin before adjusting items* 9.4% 9.7% 10.9% 3.0% 55.6%
Net financial expense and impairment loss on financial assets before adjusting (61.5) (29.6) (15.8) (15.6) (0.5)
items*
Profit before tax and adjusting items* 912.4 689.7 128.8 30.5 63.4
Number of stores 3,317 1,902 795 619 1
Accounting Policy Change
In line with the majority of large, UK-listed retail companies, we will
exclude the non-cash amortisation of acquired intangibles from our profit
before tax and adjusting items. This change will be implemented from FY25 and
will increase profit before tax and adjusting items* by c.£55m per year.
Consolidated Income Statement
For the 53 weeks ended 3 February 2024
Restated(1)
53 weeks to 3 February 2024 52 weeks to 28 January 2023
(unaudited) (unaudited)
Note
Profit before adjusting Profit before adjusting
items Adjusting Profit for the period items Adjusting Profit for the period
£m items £m £m items £m
£m £m
Revenue 10,542.0 - 10,542.0 10,125.0 - 10,125.0
2
Cost of sales (5,494.0) - (5,494.0) (5,247.4) - (5,247.4)
Gross profit 5,048.0 - 5,048.0 4,877.6 - 4,877.6
Selling and distribution expenses (3,622.7) - (3,622.7) (3,353.5) - (3,353.5)
Administrative (483.5) (52.7) (536.2) (497.3) (254.3) (751.6)
expenses
3
Share of profit of equity-accounted investees 7.6 - 7.6 4.9 - 4.9
Other operating income 30.5 - 30.5 28.6 - 28.6
Operating profit 979.9 (52.7) 927.2 1,060.3 (254.3) 806.0
Finance income 39.2 - 39.2 8.4 - 8.4
Finance expenses 3 (101.9) 5.5 (96.4) (77.3) (250.4) (327.7)
Impairment loss on financial - (58.8) (58.8) - - -
assets
3
Net financial expense (62.7) (53.3) (116.0) (68.9) (250.4) (319.3)
Profit before tax 917.2 (106.0) 811.2 991.4 (504.7) 486.7
Income tax (224.6) 18.4 (206.2) (216.6) 2.4 (214.2)
expense
4
Profit for the period 692.6 (87.6) 605.0 774.8 (502.3) 272.5
Attributable to equity holders of the parent 538.8 188.3
Attributable to non-controlling interest 66.2 84.2
Basic earnings per ordinary share 5 10.45p 3.65p
Diluted earnings per ordinary share 10.45p 3.65p
(1) Please refer to Note 15 for further details of the restatements.
Consolidated Statement of Comprehensive Income
For the 53 weeks ended 3 February 2024
Restated(1) 52 weeks to
53 weeks to 28 January
3 February 2023
2024 (unaudited)
(unaudited) £m
£m
Profit for the period 605.0 272.5
Other comprehensive income:
Items that may be classified subsequently to the Consolidated Income
Statement:
Exchange differences on translation of foreign operations (31.0) 129.9
Total other comprehensive (expense)/income for the period (31.0) 129.9
Total comprehensive income for the period (net of income tax) 574.0 402.4
Attributable to equity holders of the parent 512.8 284.2
Attributable to non-controlling interest 61.2 118.2
(1) Please refer to Note 15 for further details of the restatements.
The accompanying notes form part of the announcement.
Consolidated Statement of Financial Position
As at 3 February 2024
Restated(1) Restated(1)
As at 28
As at 3 February January As at 30 January
2024 2023 2022
(unaudited) (unaudited) (unaudited)
Note £m £m £m
Non-current assets
Intangible assets 1,429.3 1,500.5 1,514.7
Property, plant and equipment 1,151.9 875.6 688.5
Investment properties 3.1 - -
Right-of-use assets 2,296.6 2,181.8 2,075.9
Investments in associates and joint ventures 43.5 38.8 56.2
Other assets 54.3 56.9 57.0
Trade and other receivables 0.7 8.4 2.5
Deferred tax assets 4 23.8 12.9 81.7
Total non-current assets 5,003.2 4,674.9 4,476.5
Current assets
Inventories 1,592.7 1,466.4 989.4
Trade and other receivables 253.0 263.8 215.4
Income tax receivables 10.8 - 0.6
Cash and cash equivalents 1,152.7 1,508.0 1,314.0
Current assets excluding held-for-sale 3,009.2 3,238.2 2,519.4
Assets held-for-sale 12 33.8 197.5 157.1
Total current assets 3,043.0 3,435.7 2,676.5
Total assets 8,046.2 8,110.6 7,153.0
Current liabilities
Interest-bearing loans and borrowings (92.9) (75.2) (72.6)
Lease liabilities (415.9) (430.1) (384.6)
Trade and other payables (1,446.1) (1,471.2) (1,279.5)
Put and call option liabilities 8 - (184.4) (97.1)
Provisions (7.5) (9.7) (13.2)
Income tax liabilities (25.9) (17.5) -
Current liabilities excluding held-for-sale (1,988.3) (2,188.1) (1,847.0)
Liabilities held-for-sale 12 (8.2) (165.6) (142.6)
Total current liabilities (1,996.5) (2,353.7) (1,989.6)
Non-current liabilities
Interest-bearing loans and borrowings (36.6) (38.0) (55.5)
Lease liabilities (2,068.1) (1,953.9) (1,901.6)
Other payables (155.4) (102.4) (10.6)
Put and call option liabilities 8 (809.8) (920.3) (762.0)
Provisions (21.7) (21.1) (19.9)
Deferred tax liabilities 4 (89.7) (90.2) (127.4)
Total non-current liabilities (3,181.3) (3,125.9) (2,877.0)
Total liabilities (5,177.8) (5,479.6) (4,866.6)
Net assets 2,868.4 2,631.0 2,286.4
Capital and reserves
Issued ordinary share capital 2.5 2.5 2.5
Share premium 467.5 467.5 467.5
Retained earnings 2,213.8 1,974.6 1,828.0
Share based payment reserve 2.9 0.3 0.1
Foreign currency translation reserve 70.8 96.8 1.0
Put and call option reserve (301.3) (424.6) (426.3)
Total equity attributable to equity holders of the parent 2,456.2 2,117.1 1,872.8
Non-controlling interest 412.2 513.9 413.6
Total equity 2,868.4 2,631.0 2,286.4
(1) Please refer to Note 15 for further details of the restatements.
The accompanying notes form part of the announcement.
Consolidated Statement of Changes in Equity
For the 53 weeks ended 3 February 2024
Foreign currency translation reserve Total equity attributable to equity holders of the parent
Put and call option reserve Share-based £m (unaudited) Non- controlling interest
Ordinary Share premium Retained earnings £m payment reserve £m £m Total equity
share capital £m £m £m (unaudited)
£m £m
Balance at 30 January 2022 (as reported)
2.5 467.5 1,910.6 (414.5) 0.1 (40.2) 1,926.0 413.6 2,339.6
Effect of prior period restatement (Note 15)
- - (82.6) (11.8) - 41.2 (53.2) - (53.2)
Balance at 30 January 2022 (restated(1))
2.5 467.5 1,828.0 (426.3) 0.1 1.0 1,872.8 413.6 2,286.4
Profit for the period (as reported) - - 142.5 - - - 142.5 84.2 226.7
Prior period restatement (Note 15) - - 45.8 - - - 45.8 - 45.8
Profit for the period (restated(1)) - - 188.3 - - - 188.3 84.2 272.5
Other comprehensive income:
Exchange differences on translation of foreign operations
- - - - - 95.8 95.8 34.0 129.8
Total other comprehensive income - - - - - 95.8 95.8 34.0 129.8
Total comprehensive income for the period
- - 188.3 - - 95.8 284.1 118.2 402.3
Dividends to equity holders - - (24.8) - - - (24.8) (2.8) (27.6)
Put and call options held with non-controlling interests
- - - (19.1) - - (19.1) - (19.1)
Put and call options held with non-controlling interests (restated(1))
- - - 5.1 - - 5.1 - 5.1
Lapsed and disposed put options held by non- controlling interests
- - - 15.7 - - 15.7 - 15.7
Acquisition of
non-controlling interest - - (16.9) - - - (16.9) (16.4) (33.3)
Divestment of
non-controlling interest - - - - - - - (0.3) (0.3)
Non-controlling interest arising on acquisition
- - - - - - - 1.6 1.6
Share-based payment charge - - - - 0.2 - 0.2 - 0.2
Balance at 28 January 2023 (restated(1))
2.5 467.5 1,974.6 (424.6) 0.3 96.8 2,117.1 513.9 2,631.0
Profit for the period - - 538.8 - - - 538.8 66.2 605.0
Other comprehensive income:
Exchange differences on translation of foreign operations
- - - - - (26.0) (26.0) (5.0) (31.0)
Total other comprehensive (loss) - - - - - (26.0) (26.0) (5.0) (31.0)
Total comprehensive income for the period
- - 538.8 - - (26.0) 512.8 61.2 574.0
Dividends to equity holders (Note 9) - - (50.1) - - - (50.1) (2.1) (52.2)
Additions to put and call options held with non-controlling interests (Note 8)
- - - (428.8) - - (428.8) - (428.8)
Lapsed and disposed put options held by non-controlling interests (Note 8)
- - 129.7 72.0 - - 201.7 - 201.7
Acquisition of
non-controlling interest (Note 6) - - (379.2) 480.1 - - 100.9 (149.4) (48.5)
Divestment of
non-controlling interest - - - - - - - (11.4) (11.4)
Share-based payment charge - - - - 2.6 - 2.6 - 2.6
Balance at 3 February 2024 2.5 467.5 2,213.8 (301.3) 2.9 70.8 2,456.2 412.2 2,868.4
(1) Please refer to Note 15 for further details of the restatements.
Consolidated Statement of Cash Flows
For the 53 weeks ended 3 February 2024
Restated(1)
53 weeks to 52 weeks to
3 February 28 January
2024 2023
Note (unaudited) (unaudited)
£m £m
Cash flows from operating activities
Profit for the period 605.0 272.5
Adjustments for:
Income tax expense 206.2 214.2
(non-adjusting)
4
Finance expenses 101.9 77.3
(non-adjusting)
Finance expenses (adjusting) (5.5) -
Finance (39.2) (8.4)
income
Depreciation and amortisation of non-current 664.1 633.2
assets
Foreign exchange gains on monetary assets and liabilities - 2.5
Share based payment charge 2.6 -
Loss on disposal of non-current 7.6 5.1
assets
Gain/loss on FX forward contracts (recorded in Cost of sales) (16.7) 32.2
Impairment of other intangibles and non-current assets 21.6 3.4
(non-adjusting)
Impairment of goodwill and fascia names (adjusting) 34.9 117.6
Impairment of investments in associates and joint ventures (adjusting) - 19.6
Impairment of other intangibles and non-current assets (adjusting) 4.3 6.0
Other non-cash adjusting items 69.2 361.5
Share of profit of equity-accounted investees (net of tax) (7.6) (4.9)
Profit before working capital changes 1,648.4 1,731.8
Increase in inventories (196.2) (501.3)
Increase in trade and other receivables (35.6) (49.0)
Increase in trade and other payables 34.7 151.7
Cash generated from operations 1,451.3 1,333.2
Interest (17.5) (8.4)
paid
Lease interest paid (84.4) (68.9)
Income taxes paid (208.6) (174.4)
Net cash from operating activities 1,140.8 1,081.5
Cash flows from investing activities
Interest 39.2 8.4
received
Proceeds from sale of non-current assets 11.1 11.5
Acquisition of intangible assets (29.5) (19.9)
Acquisition of property, plant and equipment (500.0) (326.6)
Acquisition of other non-current assets (10.2) (12.8)
Drawdown of lease liabilities - 7.5
Dividends received from equity-accounted investees - 3.4
Cash consideration of disposals (net of cash disposed) 7 (54.1) 59.6
Investment in associates and joint ventures - (2.8)
Acquisition of subsidiaries (net of cash - (20.0)
acquired)
6
Net cash used in investing activities (543.5) (291.7)
Cash flows from financing activities
Repayment of interest-bearing loans and borrowings (124.9) (37.4)
Drawdown of interest-bearing loans and borrowings 119.1 15.5
Repayment of lease liabilities 10 (400.0) (400.5)
Divestment of non-controlling interests - 0.1
Deferred consideration paid (5.1) (29.2)
Acquisition of non-controlling (551.8) (29.3)
interests
6
Equity dividends paid 9 (50.1) (24.8)
Dividends paid to non-controlling interests in subsidiaries (2.1) (2.8)
Net cash used in financing activities (1,014.9) (508.4)
Net (decrease)/increase in cash and cash equivalents 10 (417.6) 281.4
Cash and cash equivalents at the beginning of the period(2) 10 1,548.9 1,280.4
Foreign exchange losses on cash and cash equivalents 10 (29.7) (12.9)
Cash and cash equivalents at the end of the period(2) 10 1,101.6 1,548.9
(1) Please refer to Note 15 for further details of the
restatements.
(2) Cash and cash equivalents at the end of the period ended 28
January 2023 includes £74.5m within assets held-for-sale (see Note 10 and
Note 12). Cash and cash equivalents at 3 February 2024 includes £8.8m within
assets held-for-sale (see Note 10 and Note 12).
The accompanying notes form part of the announcement.
1. Basis of Preparation
General Information
JD Sports Fashion Plc (the 'Company') is a Company incorporated in the United
Kingdom and registered in England and Wales. The financial statements for the
53 week period ended 3 February 2024 represent those of the Company and its
subsidiaries (together referred to as the 'Group'). The financial statements
will be approved for issue by the Board of Directors in due course.
Basis of Preparation
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRSs), this announcement does
not itself contain sufficient information to comply with IFRSs.
This announcement was approved by the Board of Directors on 30 May 2024. The
financial information in this announcement does not constitute the Group's
statutory accounts for the periods ended 3 February 2024 or 28 January 2023.
Statutory accounts for 28 January 2023 have been delivered to the Registrar of
Companies. The auditors have reported on those accounts; their report was
unqualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report and did not
contain a statement under section 498(2) or (3) of the Companies Act 2006. The
audit of the statutory accounts for the period ended 3 February 2024 is not
yet complete. These accounts will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and
will be delivered to the Registrar of Companies following the company's annual
general meeting. The audited Consolidated Financial Statements from which the
2023 results are extracted have been prepared under the historical cost
convention in accordance with IFRS (International Financial Reporting
Standards), as adopted by those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The standards used are those published by the
International Accounting Standards Board (IASB) and effective at the time of
preparing these financial statements (May 2024).
The Directors consider it appropriate to adopt the going concern basis of
accounting in preparing the financial statements of the Group.
Going Concern
The Directors have prepared the Group and the Company financial statements on
a going concern basis for the following reasons:
At 3 February 2024, the Group had net cash balances of £1,101.6m (28 January
2023 (restated): £1,548.9m) with available committed UK borrowing facilities
of £700m (28 January 2023: £700m) of which £Nil (28 January 2023: £Nil)
has been drawn down and is available up to 6 November 2026 and US facilities
of approximately $300m of which $13.0m was drawn down (28 January 2023: $Nil)
and is available up until 24 September 2026.
These facilities are subject to certain covenants, please refer to the Annual
Report and Accounts. The Directors believe that the Group is well placed to
manage its business risks successfully despite the current uncertain economic
outlook.
On 23 April 2024, the Group entered into a binding agreement to acquire 100%
of the outstanding share capital of Hibbett, Inc., a company listed on the
Nasdaq Stock Market, for a price of $87.50 per share in cash, implying an
equity value of $1,083m (c. £878m) and an enterprise value of $1,109m
(£899m). There has been no material change in the extent of cash and
facilities available since the period end.
The Group expects to fund the total consideration payable, and refinance
Hibbett, Inc.'s existing debt, through a combination of existing US cash
resources of $300m and a $1,000m extension to the Group's existing bank
facilities which has been committed. This acquisition remains subject to
antitrust review by the relevant US authorities.
Within the period, the Group announced the proposed acquisition of 100% of the
issued share capital of Groupe Courir S.A.S ('Courir') for an enterprise value
of €520m, which will be funded through a combination of the Group's existing
cash reserves and an agreed extension to the Group's existing bank facilities.
This acquisition remains subject to review by the European Commission.
These acquisitions have been considered as part of the going concern review.
The Directors have prepared cash flow forecasts for the Group covering a
period of at least 12 months from the date of approval of the Group and
Company financial statements, including specific consideration of a range of
impacts that could arise from geo-political tensions and the actual and
potential impact of inflationary cost pressures. These forecasts indicate that
the Group and Company will be able to operate within the level of its agreed
facilities and covenant compliance.
The Directors have considered that a combination of severe but plausible
scenarios all occurring at the same time would be required for the Group to
run out of cash and be fully drawn down on the available facilities/to breach
a covenant before consideration of mitigating actions. This is not considered
to be a plausible scenario, as the combination of all scenarios simultaneously
is considered to be exceptionally remote.
The Directors have considered all of the factors noted above and are confident
that the Group has adequate resources to continue to meet all liabilities as
and when they fall due for a period of at least 12 months from the date of
approval of these financial statements. Accordingly, the financial statements
have been prepared on a going concern basis.
1. Basis of Preparation
(continued)
Alternative Performance
Measures
The Directors measure the performance of the Group based on a range
of financial measures, including measures not recognised by International
Accounting Standards ('IAS') in conformity with the requirements of the
Companies Act 2006. These Alternative Performance Measures may not be directly
comparable with other companies' Alternative Performance Measures and the
Directors do not intend these to be a substitute for, or superior to, IFRS
measures. The Directors believe that these Alternative Performance Measures
assist in providing additional useful information on the trading performance
of the Group.
For the financial period ended 3 February 2024, the Group has updated the
presentation of the Consolidated Income Statement to a three-column format to
show adjusting items against the relevant income statement line item. The term
'adjusting items' as opposed to 'adjusted items' that was used in the prior
period has been updated as has the definition of adjusting items to include
the impairment of loan receivables. These updates are intended to provide
enhanced disclosure and greater clarity over what is classified as an
adjusting item and, by being more specific in terms of defining the adjusting
items, results in the provision of more relevant information with greater
comparability between financial periods.
Alternative Performance Measures are also used to enhance the comparability of
information between reporting periods, by accounting for adjusting items.
Adjusting items are disclosed separately when they are considered unusual in
nature and not reflective of the trading performance and profitability of the
Group. The separate reporting of adjusting items, which are presented as
adjusting within the relevant category in the Consolidated Income Statement,
helps provide an indication of the Group's trading performance. An explanation
as to why items have been classified as adjusting is given in Note 3. Further
information can be found in the Alternative Performance Measures section on
pages 56 to 62.
Adoption of New and Revised Standards
The following amendments became effective for the period ended 3 February
2024. These have no significant impact on the consolidated results or
financial position.
- Amendments to IFRS 17 - Insurance Contracts (effective from 1
January 2023).
- Amendments to IAS 1 - Disclosure of Accounting Policies (effective
from 1 January 2023).
- Amendments to IAS 8 - Definition of Accounting Policies (effective
from 1 January 2023).
- Amendments to IAS 12 - Income Taxes - Deferred Tax related to Assets
and Liabilities arising from a Single Transaction (effective from 1 January
2023).
- Amendments to IAS 12 - International Tax Reform - Pillar Two Model
Rules (effective from 1 January 2023).
The following amendments are in issue but have yet to become effective. These
are not expected to have a significant impact on the consolidated results or
financial position.
- Amendments to IFRS 10 - Lease Liability in a Sale and Leaseback
(effective from 1 January 2024).
- Amendments to IAS 1 - Non-Current Liabilities with Covenants
(effective from 1 January 2024).
- Amendments to IFRS 7 and IAS 7 - Supplier Finance Arrangements
(effective from 1 January 2024).
- Amendments to IAS 21 - Lack of Exchangeability (effective from 1
January 2025).
IAS 12 Income Taxes
The Group has adopted the amendments to IAS 12 which apply to income taxes
arising from tax law enacted, or substantively enacted, to implement the
Pillar Two model rules published by the Organisation for Economic Co-operation
and Development ('OECD').
The amendments include a mandatory temporary exemption of the accounting
requirement for deferred taxes under IAS 12, such that an entity neither
recognises nor discloses information regarding deferred tax assets and
liabilities in respect of Pillar Two. The Group has adopted this exemption.
Other
The Group continues to monitor the potential impact of other new standards and
interpretations which may be endorsed and require adoption by the Group in
future reporting periods. The Group does not consider that any other
standards, amendments or interpretations issued by the IASB, but not yet
applicable, will have a significant impact on the financial statements.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of financial statements in conformity with adopted IFRSs
requires management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts of assets and liabilities,
income and expenses.
The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements
and estimates about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
Critical Accounting Judgements
The following are critical judgements, apart from those involving estimations
(which are presented separately below), that management have made in the
process of applying the Group's accounting policies and that have the most
effect on the amounts recognised in the consolidated Group financial
statements.
Adjusting Items
Management exercises significant judgement in assessing whether items should
be classified as adjusting items. This assessment covers the nature of the
item, cause of occurrence and/or scale of impact of that item on the reported
performance. In determining whether an item should be presented as adjusting
the Group considers items which are significant because of either their size
or their nature which management believes would distort an understanding of
earnings if not separately presented.
An explanation as to why items have been classified as adjusting is given in
Note 3. Further information about metrics that the Group utilises which
exclude adjusting items can be found in the Alternative Performance Measures
section on pages 56 to 62.
1. Basis of Preparation
(continued)
Key Sources of Estimation Uncertainty
The key assumptions about the future, and other key sources of estimation
uncertainty at the reporting period end, that may have a significant risk of
causing a material adjustment to the carrying amount of assets and liabilities
within the next financial year are discussed
below:
Genesis Put and Call
Option
Genesis Put and Call Option
agreements that allow the Group's equity partners to require the Group to
purchase a non-controlling interest are recorded in the Consolidated Balance
Sheet initially at the present value of the redemption amount, in accordance
with IAS 32 Financial Instruments: Presentation. On initial recognition, the
corresponding amount is recognised against the put and call option reserve.
Changes in the measurement of the financial liability due to the unwinding of
the discount or changes in the amount that the Group could be required to pay
are recognised in the Consolidated Income Statement. If the contract expires
without delivery, the carrying amount of the financial liability is
reclassified to equity, otherwise the financial liability is derecognised for
the amount settled.
The key significant option outstanding as at 3 February 2024 relates to the
Group's US sub-group, Genesis. The Genesis put and call liability at 3
February 2024 was £763.5m (2023 (restated): £782.9m).
The Group uses a third-party valuation expert to independently determine the
present value of the exercise price of the Genesis put and call options. The
approach uses a Monte-Carlo simulation model applying a geometric Brownian
motion to project the share price and an arithmetic Brownian motion for the
projection of EBITDA forecasts. See Note 8 for the full accounting policy.
The critical estimate used for the calculation used to value the put and call
option liability is the EBITDA forecasts and growth assumptions for future
period used. Further information about the sensitivities used can be found in
Note 8.
Accounting Policies
Supplier Rebates
Supplier rebates include promotion cost contributions and marketing initiative
support and are recognised in the Consolidated Financial Statements when they
are contractually agreed with the supplier and can be reliably measured. Such
rebates typically relate to the launch of such initiatives and therefore
rebate income is typically recognised across the period in which launch costs
are recognised.
Contributions towards store fixtures are recognised as a credit within the
Consolidated Income Statement within the period in which they are received.
Other rebates are agreed with suppliers retrospectively once specific targets
have been achieved and recognised after the end of the relevant supplier's
financial year.
Future Changes in Accounting Policies
Segmental Analysis
As announced in the Group's FY24 Trading Update on 28 March 2024, with effect
from the 52 week period ending 1 February 2025, new segmentation will be used
for reporting, initially at the Q2 trading update in August 2024 and then for
the interim results for the 26 week period ending 3 August 2024.
Adjusting items
In line with the majority of large, UK-listed retail companies, with effect
from the 52 week period ending 1 February 2025 the Group will extend its
definition of adjusting Items to include amortisation of acquired intangibles.
2. Segmental Analysis
Information regarding the Group's reportable segments for the 53 weeks to 3
February 2024 is shown below:
Sports Fashion Outdoor Unallocated Total
Income statement £m £m £m (unaudited)
£m
Gross revenue 9,982.4 559.6 - 10,542.0
Inter-segment revenue (0.3) 0.3 - -
Revenue 9,982.1 559.9 - 10,542.0
Gross profit % 48.4% 42.3% - 47.9%
Operating profit/(loss) before adjusting items 987.2 (7.3) - 979.9
Adjusting items (42.9) (9.8) - (52.7)
Operating profit/(loss) 944.3 (17.1) - 927.2
Finance income - - 39.2 39.2
Impairment loss on financial assets (58.8) - - (58.8)
Finance expenses (96.4) - - (96.4)
Profit/(loss) before tax 789.1 (17.1) 39.2 811.2
Income tax expense (206.1) (0.1) - (206.2)
Profit/(loss) for the period 583.0 (17.2) 39.2 605.0
Sports Fashion Outdoor Eliminations Total
Total assets and liabilities £m £m £m (unaudited)
£m
Total assets 7,815.1 385.0 (153.9) 8,046.2
Total liabilities (4,986.3) (345.4) 153.9 (5,177.8)
Total segment net assets 2,828.8 39.6 - 2,868.4
Sports Fashion Outdoor Total
Other segment information £m £m (unaudited)
£m
Capital expenditure:
Intangible assets (software development) 29.5 - 29.5
Intangible assets (brand licences) 73.0 - 73.0
Property, plant and equipment 518.9 10.9 529.8
Right-of-use assets 582.8 10.0 592.8
Other non-current assets 10.2 - 10.2
Depreciation, amortisation and impairments:
Amortisation of intangible assets 68.3 4.7 73.0
Depreciation of property, plant and equipment 168.8 9.0 177.8
Depreciation and amortisation of right-of-use assets 391.3 22.0 413.3
Impairment of non-current assets (adjusting items) 26.4 9.8 36.2
Impairment of non-current assets (non-adjusting items) 15.1 - 15.1
2. Segmental Analysis (continued)
The comparative segmental results for the 52 weeks to 28 January 2023 are
shown below:
Restated((1))
Sports Fashion Outdoor Eliminations Total
£m £m £m (unaudited)
Total assets and liabilities £m
Total assets 7,842.1 462.1 (193.6) 8,110.6
Total liabilities (5,273.5) (399.7) 193.6 (5,479.6)
Total segment net assets 2,568.6 62.4 - 2,631.0
Restated((1))
Sports Fashion Outdoor Total
Other segment information £m £m (unaudited)
£m
Capital expenditure:
Intangible assets (software development) 19.9 - 19.9
Intangible assets (brand licences) 78.4 - 78.4
Property, plant and equipment 305.6 21.0 326.6
Right-of-use assets 374.3 35.6 409.9
Other non-current assets 12.8 - 12.8
Depreciation, amortisation and impairments:
Amortisation of intangible assets 71.6 4.4 76.0
Depreciation of property, plant and equipment 154.1 7.9 162.0
Depreciation of right-of-use assets 372.2 23.0 395.2
Impairment of non-current assets (adjusting items) 83.8 39.8 123.6
Impairment of investment in associates and joint ventures (adjusting items) 19.6 - 19.6
Impairment of non-current assets (non-adjusting items) 3.4 - 3.4
(1) Please refer to Note 15 for further details of the
restatement.
2. Segmental Analysis (continued)
Geographical Information
The Group's operations are located in the UK, Andorra, Australia, Austria,
Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Croatia, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong,
Hungary, India, Indonesia, Israel, Italy, Latvia, Lithuania, Malaysia, the
Netherlands, New Zealand, Poland, Portugal, the Republic of Ireland ('ROI'),
Romania, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain and the
Canary Islands, Sweden, Thailand, the UAE and the US.
The following table provides analysis of the Group's revenue by geographical
market, irrespective of the origin of the goods/services:
53 weeks to 52 weeks to
3 February 28 January
Revenue 2024 2023
(unaudited) (unaudited)
£m £m
UK & ROI 3,510.2 3,826.7
Europe 3,093.5 2,659.9
North America 3,413.5 3,150.1
Rest of world 524.8 488.3
10,542.0 10,125.0
The revenue from any individual country, with the exception of the UK, US and
Spain, is not more than 10% of the Group's total revenue.
Revenue by channel
Restated((1))
53 weeks to 52 weeks to
Revenue 3 February 28 January
2024 2023
(unaudited) (unaudited)
£m £m
Retail stores 7,956.6 7,306.5
Online 2,350.3 2,543.3
Other(2) 235.1 275.2
10,542.0 10,125.0
(1) Some amounts disclosed in the analysis above have been
reclassified during the current and previous period to be consistent with the
commercial analysis presented in the Alternative Performance Measures (see
page 60). These reclassifications have no effect on the overall reported
results.
(2) Other relates to revenue from leisure club memberships,
wholesale and commission sales.
Revenue by product type
53 weeks to 52 weeks to
3 February 28 January
Revenue 2024 2023
(unaudited) (unaudited)
£m £m
Footwear 5,920.4 5,471.4
Apparel 3,408.4 3,560.6
Accessories 669.5 629.6
Other(3) 543.7 463.4
10,542.0 10,125.0
(3) Other relates to revenue from sales of outdoor living
equipment, delivery income and revenue from leisure club memberships.
The following is an analysis of the carrying amount of segmental non-current
assets by the geographical area in which the assets are located.
Restated((4)) 52 weeks to Restated((4)) 52 weeks to
53 weeks to 28 January 30 January
3 February 2023 2022
Non-current assets 2024 (unaudited) (unaudited)
(unaudited) £m £m
£m
UK & ROI 1,254.1 1,239.6 1,252.5
Europe 1,702.5 1,472.8 1,378.2
North America 1,901.7 1,800.6 1,682.5
Rest of world 144.9 161.9 163.3
5,003.2 4,674.9 4,476.5
(4) Please refer to Note 15 for further details of the
restatement.
(5)
3. Adjusting Items
For the financial period ended 3 February 2024, the Group has updated the
presentation of the Consolidated Income Statement to a three-column format to
show adjusting items against the relevant income statement line item. The term
'adjusting items', as opposed to 'adjusted items' that was used in the prior
financial period, has been updated as has the definition of adjusting items to
include the impairment of loan receivables not recoverable. These updates are
intended to provide enhanced disclosure and greater clarity over what is
classified as an adjusting item and, by being more specific in terms of
defining the adjusting items, result in the provision of more relevant
information with greater comparability between financial periods.
The Group exercises judgement in assessing whether items should be classified
as adjusting items. This assessment covers the nature of the item, cause of
occurrence and scale of impact of that item on the reported performance. In
determining whether items should be presented as adjusting items, the Group
considers items that are significant because of either their size or their
nature which management believe would distort an understanding of earnings if
not adjusted. In order for an item to be presented as an adjusting item, it
should typically meet at least one of the following criteria:
- Impairments of tangible and intangible assets, investments and
loan receivables not recoverable
- Unusual in nature or outside the normal course of business
(for example, the non-cash movement in the present value of put and call
options)
- Items directly incurred as a result of either an acquisition
or a divestment, or arising from a major business change or restructuring
programme.
The separate reporting of items, which are presented as adjusting items within
the relevant category in the Consolidated Income Statement, helps provide an
indication of the Group's trading performance in the normal course of
business. The tax impact of these adjusting items is a tax credit of £18.4m
(2023: £2.4m) as shown in Note 5 and on the face of the Consolidated Income
Statement.
Restated((1))
53 weeks to 52 weeks to
3 February 28 January
2024 2023
(unaudited) (unaudited)
Note £m £m
Impairments of tangible and intangible assets and investments:
Impairments of tangible and intangible assets and investments(2) 39.2 137.2
Items as a result of acquisitions, divestments, major business changes or
restructuring:
Divestment and restructuring(3) 38.3 129.6
Gain arising on deconsolidation(4) (36.1) -
Acquisition-related costs(5) 10.8 -
Deferred consideration charge/(release)(6) 0.5 (12.5)
Administrative expenses - Adjusting items 52.7 254.3
Items that are unusual in nature or outside the normal course of business:
Movement in present value of put and call (5.5) 250.4
options
8
Finance expenses - Adjusting items (5.5) 250.4
Impairments of loan receivables not recoverable(7) 58.8 -
Impairment loss on financial assets - Adjusting items 58.8 -
Adjusting items 106.0 504.7
(1) Please refer to Note 15 for further details of the
restatement.
(2) The impairment of tangible and intangible assets and
investments in the current period relates to the impairment of goodwill
(£12.2m), fascia name (£3.4m), right-of-use assets (£2.5m), and property,
plant and equipment (£1.8m) arising on the acquisition of Total Swimming
Holdings Limited. The charge also includes goodwill impairment prior to the
divestment of GymNation (£7.9m), the impairment of the Go Outdoors fascia
(£9.8m) and impairment of the goodwill and fascia names on three non-core
businesses (£1.6m). The impairment in the prior period primarily related to
the goodwill and fascia name arising on the acquisition of Deporvillage
(£24.7m), Hairburst (£21.6m), Leisure Lakes (£21.1m), Wheelbase (£18.7m),
Bodytone (£12.4m), Missy Empire (£10.2m), Livestock (£7.1m), Wellgosh
(£1.0m), Oi Polloi (£0.7m) and Philip Browne (£0.1m). In addition there was
an impairment charge for the investment in Gym King of £19.6m.
(3) During the current period, £31.4m of divestment costs (2023:
£121.5m) and £6.9m of restructuring charges (2023: £8.1m) were incurred.
(4) A net gain of £36.1m arose following the deconsolidation of
Sports Unlimited Retail ('SUR') after the entity entered bankruptcy on 6
December 2023. From this point onwards the entity was no longer under the
control of JD Sports Fashion Plc and was deconsolidated (see footnote (8) and
Note 7 for further information).
(5) Acquisition-related costs of £10.8m are in respect of the
Groupe Courir acquisition which remains subject to review by the European
Commission and hence as at the date of this report, has not been concluded.
(6) In the current period, the £0.5m is related to
acquisition-related deferred consideration. In the prior period, this related
to acquisition-related release of contingent consideration for Leisure Lakes
(£10.5m) and Total Swimming Holdings Limited (£2.0m).
(7) A £57.9 million impairment loss arose on the loan owed by
Sports Unlimited Retail to Iberian Sports Retail Group and Sprinter
Megacentros del Deporte SLU, at the time the entity entered bankruptcy (see
footnote (4)). The remaining £0.9 million relates to other impairments.
4. Tax Expense
The total tax charge included in the Consolidated Income Statement consists of
current and deferred tax.
Current Income Tax
Current tax is the expected tax payable on taxable income for the financial
period, using the applicable enacted tax rates in each relevant jurisdiction.
Tax expense is recognised in the Consolidated Income Statement except to the
extent it relates to items recognised in the Consolidated Statement of
Comprehensive Income or directly in the Consolidated Statement of Changes in
Equity, in which case it is recognised in the relevant statement,
respectively.
Deferred Tax
Deferred tax is accounted for using the balance sheet liability method, by
providing for temporary differences that arise between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The following temporary differences are not provided
for:
- Goodwill not deductible for tax purposes.
- The initial recognition of assets or liabilities that affect
neither accounting nor taxable profit.
- Differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realised, based on the tax
rates that have been enacted or substantively enacted by the balance sheet
date. Deferred tax is charged or credited in the Consolidated Income
Statement, except when it relates to items charged or credited directly to the
Consolidated Statement of Changes in Equity or the Consolidated Statement of
Comprehensive Income, in which case the deferred tax is recognised in the
relevant statement, respectively.
Tax provisions are recognised for uncertain tax positions where a risk of an
additional tax liability has been identified and it is probable that the Group
will be required to settle that tax. Measurement is dependent on management's
expectation of the outcome of decisions by tax authorities in the various tax
jurisdictions in which the Group operates. This is assessed on a case-by-case
basis using in-house tax experts, professional advisers and previous
experience.
Pillar Two Model Rules
The Group has continued to monitor developments in relation to the OECD's Two
Pillar Solution to Address the Tax Challenges arising from the Digitalisation
of the Economy ("Pillar Two Model Rules").
Based on the financial forecasts for the period ended 1 February 2025,
approximately 1.8% of the group's annual profits for that period may be
subject to a top-up tax. Prior to the application of the Pillar Two Model
Rules, the Group would have expected these profits to be taxed at an average
effective tax rate of 13.0%. As such, any top-up tax payable under the Pillar
Two Model Rules is not expected to have a material impact on the Group's
overall income tax charge. The Group continues to assess the impact of the
Pillar Two income taxes legislation on its future financial performance. It
has also applied the temporary exemption issued by the IASB in May 2023 in
respect of IAS 12 and has not recognised or disclosed information in respect
of deferred tax assets and liabilities relating to Pillar Two Model Rules
income taxes.
Restated((1))
53 weeks to 52 weeks to
3 February 28 January
2024 2023
(unaudited) (unaudited)
£m £m
Current tax
UK corporation tax at 24.0% (2023: 19.0%)(2) 221.9 198.9
Adjustment relating to prior periods (5.8) (6.5)
Total current tax charge 216.1 192.4
Deferred tax
Deferred tax (origination and reversal of temporary differences) (2.5) 14.1
Adjustment relating to prior periods (7.4) 7.7
Total deferred tax (credit)/charge (9.9) 21.8
Income tax expense 206.2 214.2
4. Tax Expense (continued)
Restated((1))
53 weeks to 52 weeks to
3 February 28 January
2024 2023
(unaudited) (unaudited)
£m £m
Profit before tax multiplied by the standard rate of corporation tax 194.7 92.5
24.0%(2) (2023: 19.0%)
Effects of:
Expenses not deductible(3) 31.0 23.2
Put and call option movement not deductible(4) (3.3) 47.5
Depreciation and impairment of non-qualifying non-current assets(5) 2.1 1.2
Non-qualifying profit on sale of PPE(6) 0.1 (0.2)
Utilisation of previously unrecognised tax losses(7) (0.9) (4.0)
Non-taxable income(8) (21.1) (4.0)
Effect of tax rates in foreign jurisdictions(9) (10.3) 14.9
Research and development tax credits and other allowances(10) (5.2) (10.4)
Adjustments related to prior periods(11) (13.2) 1.2
Other differences in tax rate(12) 0.5 3.7
Non-qualifying impairment of goodwill on consolidation(13) 2.2 24.4
Change in unrecognised temporary differences(14) 12.9 7.2
Other taxes due(15) 16.7 17.0
Income tax expense 206.2 214.2
(1) Please refer to Note 15 for further details of the
restatement.
(2) The weighted standard rate of corporation tax for the period
is 24% as the UK mainstream tax rate was 19% until 31 March 2023, when it
increased to 25%.
(3) Certain legal and professional fees, together with the losses
incurred on the divestment of non-core businesses in the current period, are
not deductible for tax purposes.
(4) The movements in the put and call options per Note 8 are not
deductible for tax.
(5) The depreciation adjustment relates to UK assets which are not
eligible for capital allowances.
(6) The loss relates to the sale of tangible assets which are not
eligible for capital allowances.
(7) Following a return to profitability of certain Group
subsidiaries, brought forward losses have been utilised in the period and a
deferred tax asset recognised in respect of any remaining losses.
(8) Non-taxable gain on deconsolidation of Sports Unlimited Retail
Limited (see Note 3), the receipt of dividends and the release of deferred
consideration which no longer falls due.
(9) A proportion of the Group's profits arise outside of the UK
and are taxed at the prevailing tax rate. As the UK corporation tax rate has
increased from 19% to 25% in the period, the impact of overseas tax rates has
reduced.
(10) R&D and general business tax credits have been claimed in the
US, Spain and Poland.
(11) The prior period adjustment reflects net current and deferred tax
movements between Group reporting provisions and submitted returns.
(12) The adjustment reflects the difference between the deferred tax
rate and corporate income tax rate. These differences have reduced as a result
of the UK corporate income tax increasing to 25% on 1 April 2023.
(13) The impairment of goodwill on consolidation and investments in
associates are non-deductible for corporate income tax purposes and does not
attract deferred tax.
(14) The adjustment represents losses created in the period for which
no deferred tax asset has been recognised, due to a lack of certainty over
future taxable profits arising.
(15) Other taxes due are primarily in respect of US state taxes but
also include local taxes payable in other overseas jurisdictions.
Deferred tax assets and liabilities are attributable to the following:
Assets Assets Liabilities Liabilities 2023 Net Net
2024 2023 2024 (unaudited) 2024 2023
(unaudited) (unaudited) (unaudited) £m (unaudited) (unaudited)
£m £m £m £m £m
Property, plant and equipment 3.8 2.1 (68.9) (57.9) (65.1) (55.8)
Employee benefits 12.4 13.1 - - 12.4 13.1
Property 32.2 31.0 (0.5) (0.4) 31.7 30.6
Specific trade provisions 8.5 12.3 - - 8.5 12.3
Losses 10.1 5.0 - - 10.1 5.0
Fascia names - - (66.3) (85.0) (66.3) (85.0)
Other 3.7 2.6 (0.9) (0.1) 2.8 2.5
Tax assets/(liabilities) 70.7 66.1 (136.6) (143.4) (65.9) (77.3)
In accordance with IAS 12, UK deferred tax has been recognised at the enacted
rate of 25% at the balance sheet date. Deferred tax is recognised at the local
enacted rate for overseas territories.
The table above shows the split of the deferred tax balance by category. The
Consolidated Statement of Financial Position shows the position after the
legally enforceable right of offset. This results in an asset of £23.8m
(2023: £12.9m) and a liability of £89.7m (2023: net liability £90.2m) in
the Consolidated Statement of Financial Position. This reflects the net
position of £65.9m liability (2023: £77.3m liability) shown in the table
above.
5. Earnings Per Ordinary Share
Basic and Adjusted Earnings Per Ordinary Share
On 20 December 2022, JD Sports Fashion Plc completed the placing of new
ordinary shares in the capital of the Company. A total of 25,000,000 new
ordinary shares were issued at par, increasing the total ordinary shares in
issue to 5,183,135,745.
The calculation of basic earnings per ordinary share at 3 February 2024 is
based on the profit for the period attributable to equity holders of the
parent of £538.8m (2023: £188.3m restated(1)) and a weighted average number
of ordinary shares outstanding during the 53 week period ended 3 February 2024
of 5,183,135,745 (2023: 5,158,497,877).
There have been no other transactions involving ordinary shares or potential
ordinary shares in the period or since the period end date and the date of
signing of these financial statements.
Adjusted basic earnings per ordinary share have been based on the profit for
the period attributable to equity holders of the parent for each financial
period but excluding the post-tax effect of adjusting items. The Directors
consider that this gives a more useful measure of the trading performance and
profitability of the Group.
53 weeks to 52 weeks to
3 February 28 January
2024 2023
(unaudited) (unaudited)
millions millions
Issued ordinary shares at beginning of period 5,183.1 5,158.1
Ordinary shares issued on 20 December 2022 - 25.0
Issued ordinary shares at end of period 5,183.1 5,183.1
Restated((1)(2)) 52 weeks to
53 weeks to 28 January
3 February 2023
2024 (unaudited)
Note (unaudited) £m
£m
Profit for the period attributable to equity holders of the parent 538.8 188.3
Adjusting 106.0 504.7
items
3
Tax relating to adjusting items (18.4) (2.4)
Profit for the period attributable to equity holders of the parent excluding 626.4 690.6
adjusting items
millions millions
Weighted average number of ordinary shares at end of the period (basic) 5,158.2 5,158.1
Dilution - Effect of potentially dilutive share options and awards 0.7 -
Weighted average number of ordinary shares at the end of the period (diluted) 5,158.9 5,158.1
Basic earnings per ordinary share 10.45p 3.65p
Diluted earnings per ordinary share 10.45p 3.65p
Adjusted basic earnings per ordinary share 12.14p 13.39p
Adjusted diluted earnings per ordinary share 12.14p 13.39p
(1) See Note 15 for further details of the restatement.
(2) On 20 December 2022, a total of 25,000,000 ordinary shares of
0.05 pence each were issued at par. The shares were delivered to the JD Sports
Employee Benefit Trust ('Trust') and were issued, in part, to satisfy a
buy-out award due to Régis Schultz, the Group's Chief Executive Officer with
an effective date of 5 September 2022, of which a proportion of the award
became vested in the period ended 3 February 2024 after certain continuous
employment requirements were satisfied. In the same period, the remaining
shares became dilutive.
6. Acquisitions
Business
Combinations
The Group accounts for business combinations using the acquisition
method when control is transferred to the Group. The Group controls an entity
when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect the returns through its power
over the entity.
Costs related to the acquisition, other than those associated with the issue
of debt or equity securities, that the Group incurs in connection with a
business combination are expensed as incurred.
The consideration transferred in the acquisition is measured at fair value, as
are the identifiable net assets acquired. Any goodwill that arises is tested
annually for impairment, however, any resulting impairment will not be tax
deductible. The consideration transferred does not include amounts related to
the settlement of pre-existing relationships. Such amounts are generally
recognised in the Consolidated Income Statement.
Any contingent consideration is measured at fair value at the date of
acquisition. If an obligation to pay contingent consideration that meets the
definition of a financial instrument is classified as equity, then it is not
remeasured, and the settlement is accounted for within equity. Otherwise,
subsequent changes in the fair value of the contingent consideration are
recognised in the Consolidated Income Statement.
Current Period Acquisitions - Acquisition of Non-Controlling Interests
JD Sports Fashion Germany GmbH
On 25 April 2023, JD Sports Fashion Plc ('JD') acquired the remaining 20% of
the issued share capital in its existing subsidiary JD Sports Fashion Germany
GmBH ('JD Germany') for a cash consideration of €7.2m (£6.1m). The Group
now owns 100% of the issued share capital of JD Germany. In accordance with
IFRS 10, the Group had previously assessed and concluded that it controlled
the subsidiary. As the step-up acquisition on 25 April 2023 does not result in
a change of control, this has been accounted for as an equity transaction.
JD Sports Fashion SDN BDH
On 30 August 2023, JD acquired the remaining 20% of the issued share capital
in its existing subsidiary JD Sports Fashion SDN BDH ('JD Malaysia') for a
cash consideration of 195.5m MYR (£35.5m). The Group now owns 100% of the
issued share capital of JD Malaysia. In accordance with IFRS 10, the Group had
previously assessed and concluded that it controlled the subsidiary. As the
acquisition on 30 August 2023 does not result in a change of control, this has
been accounted for as an equity transaction.
Iberian Sports Retail Group S.L.
On 10 October 2023, JD acquired the remaining 49.99% of the issued share
capital in its existing subsidiary Iberian Sports Retail Group S.L. ('ISRG')
for a cash consideration of €500.1m (£434.6m). At the date of the step-up
acquisition the Group held a put and call option liability recognised in the
period on the remaining 49.99% which carried a value of £428.8m. The Group
now owns 100% of the issued share capital of ISRG. In accordance with IFRS 10,
the Group had previously assessed and concluded that it controlled the
subsidiary. As the acquisition on 10 October 2023 does not result in a change
of control, this has been accounted for as an equity transaction.
Marketing Investment Group S.A.
On 21 December 2023, JD acquired the remaining 40% of the issued share capital
in its existing subsidiary Marketing Investment Group S. A. ('MIG') for a cash
consideration of 343.2m PLN (£68.7m). At the date of the step-up acquisition
the Group held a put and call option liability on the remaining 40% which
carried a value of £66.7m. The Group now owns 100% of the issued share
capital of MIG. In accordance with IFRS 10, the Group had previously assessed
and concluded that it controlled the subsidiary. As the step-up acquisition on
21 December 2023 does not result in a change of control, this has been
accounted for as an equity transaction.
Other Acquisitions of Non-Controlling Interest
During the period ended 3 February 2024, the group made four other
acquisitions of non-controlling interests which were not material for a cash
consideration of £6.9m.
The table below presents the amounts recognised within retained earnings and
non-controlling interest within the statement of changes in equity during the
year.
Non-controlling
Retained earnings interest Total
£m £m (unaudited)
£m
Acquisition of non-controlling interest:
ISRG 308.2 126.4 434.6
JD Germany 10.9 (4.8) 6.1
JD Malaysia 32.1 3.4 35.5
MIG 44.0 24.7 68.7
Other 7.2 (0.3) 6.9
402.4 149.4 551.8
6. Acquisitions (continued)
Prior Period Acquisitions - 52 weeks to 28 January 2023
There were no significant acquisitions in the 52 week period ended 28 January
2023. The table below summarises the net assets acquired, consideration paid
and goodwill arising on the acquisition in totality across all acquisitions in
the period:
Fair values
acquired
(unaudited)
£m
Acquiree's net assets at acquisition date:
Intangible assets 6.6
Property, plant and equipment 19.3
Right-of-use assets 9.2
Inventories 0.4
Cash and cash equivalents 1.1
Trade and other receivables 3.3
Trade and other payables (11.6)
Bank loans and overdrafts (3.8)
Deferred tax liability (3.7)
Lease liabilities (6.7)
Provisions (0.5)
Net identifiable assets 13.6
Non-controlling interest (various) (1.6)
Goodwill on acquisition 12.6
24.6
Consideration - satisfied in cash 21.1
Consideration - deferred 3.5
Total consideration 24.6
Total Swimming Holdings Ltd
On 27 May 2022, JD completed, via its existing subsidiary JD Sports Gyms
Limited, the acquisition of 60% of the issued share capital of Total Swimming
Holdings Limited for an initial cash consideration of £11.1m
Additional deferred contingent consideration of up to £4.0m was included in
the financial statements for the expected to be payable at the end of the
period ended 28 January 2023. The fair value of the remaining contingent
consideration as at 3 February 2024 was determined to be £1.4m.
Other Acquisitions
During the 52 week period to 28 January 2023, the Group made two other
acquisitions for total cash consideration of £10m, which were not material.
The acquiree's net assets at acquisition related to these acquisitions are
also included in the fair value table above.
JD Sports Fashion Korea Inc
On 6 September 2022, JD acquired the remaining 50% of the issued share
capital in its existing subsidiary JD Sports Fashion Korea Inc ('JD Korea')
for a cash consideration of 26.1 billion KRW (£16.4m). The Group now owns
100% of the issued share capital of JD Korea. In accordance with IFRS 10, the
Group had previously assessed and concluded that it controlled the subsidiary.
As the acquisition on 6 September 2022 does not result in a change of control,
this has been accounted for as an equity transaction.
After the period ended 28 January 2023, the Group announced that JD would be
withdrawing from the South Korean market.
Deporvillage S.L.
On 14 October 2022, ISRG, the Group's existing intermediate holding company in
Spain, acquired a further 18% of the issued share capital in its existing
subsidiary Deporvillage S.L. ('Deporvillage') for a cash consideration of
€14.8m (£12.9m) and deferred consideration of €5.0m (£4.3m) subject to
the non-controlling interests abiding by certain non-compete obligations. 50%
of the deferred consideration was settled in the 53 week period to 3 February
2024 with the remaining 50% due on the second anniversary of the completion
date. ISRG now owns 98% of the issued share capital and at the date of the
acquisition, the Group owned an effective shareholding of 49% of the issued
share capital of Deporvillage. In accordance with IFRS 10, the Group had
previously assessed and concluded that it controlled the subsidiary. As the
acquisition on 14 October 2022 does not result in a change of control, this
was accounted for as an equity transaction. Subsequent to the acquisition of
the remaining 49.99% of ISRG on 10 October 2023, the Group now owns an
effective shareholding of 98% of the issued share capital in Deporvillage.
7. Divestments
On 16 December 2022, the Group announced its plan to significantly simplify
its business offering through the divestment of a number of non-core
businesses in order to focus more fully on the opportunities across the rest
of the Group. As a result, 16 businesses in total were divested for total cash
consideration of £18.8m received in the period ended 3 February 2024, with
deferred consideration of £2.0m.
The Group completed the divestment of 12 businesses for £14.7m at various
dates in the period ended 3 February 2024:
- Tessuti Group Limited (100% equity interest) - including its
subsidiaries Tessuti Limited (87.5% equity interest), Tessuti (Ireland)
Limited (87.5% equity interest), Tessuti Retail Limited (100% equity interest)
and Prima Designer Limited (100% equity interest) (divested on 7 February
2023);
- Choice Limited (87.5% equity interest) - including its
subsidiary Choice 33 Limited (87.5% equity interest) (divested on 7 February
2023);
- Giulio Limited (87.5% equity interest) - including its
subsidiaries Giulio Fashion Limited (87.5% equity interest) and Giulio Woman
Limited (87.5% equity interest) (divested on 7 February 2023);
- R.D. Scott Limited (100% equity interest) (divested on 7
February 2023);
- Catchbest Limited (80% equity interest) (divested on 7
February 2023);
- Rascal Clothing Limited (75% equity interest) (divested on 6
February 2023);
- Source Lab Limited (85% equity interest) (divested on 28
February 2023);
- Topgrade Sportswear Holdings Limited including its
subsidiaries Topgrade Sportwear Limited and GetTheLabel.com Limited (80%
equity interest) (divested on 2 March 2023);
- Woodlandslove Limited (80% equity interest) (divested on 9
March 2023);
- 80s Casual Classics Limited including its subsidiary Modern
Casuals Limited (70% equity interest) (divested on 26 May 2023);
- Bernard Esher Limited (80% equity interest) (divested on 4
July 2023); and
- Hairburst Holding Group Limited including its subsidiaries
Hair Burst Limited, JMH Cosmetics Limited and Mrblancteeth Limited (75% equity
interest) (divested on 24 July 2023).
In addition, on 23 May 2023, the Group disposed of Brand Stable Limited (49%
equity interest) a fixed asset investment in a joint venture for cash
consideration of £0.5m.
On 2 February 2024, the group sold 0.64% of its holding in Applied Nutrition
Limited, while still retaining the Group as an associate, for cash
consideration of £1.6m. The consideration was received fully in cash during
the period. Costs to sell amounted to £0.3m.
On 30 August 2023, the Group disposed of SEA Sports Fashion SDN BHD (60%
equity interest). The total cash consideration was £1.
Additionally, on 20 December 2023, the Group disposed of Kukri Sports Limited
(75% equity interest) including its subsidiaries Kukri Asia Limited (100%
equity interest), Kukri Sports Middle East JLT (100% equity interest, Kukri GB
Limited (100% equity interest), Kukri PTE Limited (100% equity interest),
Kukri NZ Limited (75% equity interest), Kukri Events Limited (100% equity
interest), Kukri Sports Ireland Limited (100% equity interest), Frank Harrison
Limited (90% equity interest), Kukri Sports Canada Inc (75% equity interest),
Kukri (HK) Limited (100% equity interest), Kukri Australia Pty Limited (100%
equity interest), Kukri (Shanghai) Limited (100% equity interest) and Squirrel
Sports Limited (100% equity interest). The total consideration was £2.5m, of
which £0.5m was deferred.
7. Divestments (continued)
At the date of disposal, the carrying amounts of the 16 divested businesses'
(including one joint venture and part of an associate) net assets were as
follows:
(unaudited)
£m
Intangible assets 20.6
Property, plant and equipment 17.1
Right-of-use assets 31.0
Deferred tax assets 0.2
Other non-current assets 0.4
Investments 1.3
Total non-current assets 70.6
Inventories 63.0
Trade and other receivables 19.8
Income tax recoverable 0.1
Cash and cash equivalents 77.7
Total current assets 160.6
Trade and other payables (174.4)
Provisions (0.2)
Lease liabilities (5.4)
Total current liabilities (180.0)
Deferred tax liabilities (1.1)
Lease liabilities (27.6)
Other payables and accrued expenses (1.2)
Total non-current liabilities (29.9)
Total assets less total liabilities 21.3
Net assets disposed of (21.3)
Total consideration received in cash 18.8
Total deferred consideration 2.0
Provision for additional onerous leases (1.7)
Intercompany debt written off (7.1)
Loss on disposal (9.3)
Total consideration received in cash 18.8
Cash and cash equivalents disposed of (77.7)
Net cash paid (58.9)
7. Divestments
(continued)
GymNation
On 1 November 2023, the Group disposed of GymNation Holding Ltd (78.2%
equity interest) including its subsidiary GymNation LLC. The total
consideration was £34.2m. The net assets of the business were classed as
held-for sale-in the half year results. At the date of the disposal, the
carrying amounts of GymNation's net assets were as follows:
(unaudited)
£m
Intangible assets 19.2
Property, plant and equipment 6.8
Right-of-use assets 19.2
Total non-current assets 45.2
Inventories 0.2
Trade and other receivables 2.8
Cash and cash equivalents 11.9
Total current assets 14.9
Trade and other payables (3.2)
Borrowings (5.0)
Lease liabilities (2.7)
Total current liabilities (10.9)
Lease liabilities (18.4)
Other payables and accrued expenses (1.0)
Total non-current liabilities (19.4)
Total assets less total liabilities 29.8
Net assets disposed of (29.8)
Total consideration received in cash 34.2
Gain on disposal 4.4
Total consideration received in cash 34.2
Cash and cash equivalents disposed of (11.9)
Net cash received 22.3
7. Divestments (continued)
Focus Brands Limited
On 24
January 2024, the Group disposed of Focus Brands Limited (100% equity
interest) including its subsidiaries Focus Group Holdings Limited (100% equity
interest), Focus International Limited (100% equity interest), Focus Sports
& Leisure International Limited (100% equity interest), Focus Equipment
Limited (100% equity interest), Focus International NL B.V. (100% equity
interest) and Focus Italy S.p.a. (100% equity interest). The total
consideration was £8m, of which £5m was deferred. This decision was made
following the half year announcement, therefore the net assets were not
classed as held-for-sale. At the date of the disposal, the carrying amounts of
Focus Group's net assets were as follows:
(unaudited)
£m
Intangible assets 0.7
Property, plant and equipment 1.4
Right-of-use assets 5.6
Deferred tax assets 0.3
Total non-current assets 8.0
Inventories 12.2
Trade and other receivables 11.2
Income tax recoverable 0.6
Cash and cash equivalents 13.2
Total current assets 37.2
Trade and other payables (7.9)
Lease liabilities (1.2)
Total current liabilities (9.1)
Lease liabilities (4.6)
Total non-current liabilities (4.6)
Total assets less total liabilities 31.5
Net assets disposed of (31.5)
Total consideration received in cash 3.0
Total deferred consideration 5.0
Loss on disposal (23.5)
Total consideration received in cash 3.0
Cash and cash equivalents disposed of (13.2)
Net cash paid (10.2)
7. Divestments (continued)
Sports Unlimited Retail
B.V
On 6 December 2023, the Group made the decision to close the Sports
Unlimited Retail B.V ('SUR') business. On this date, the entity entered
bankruptcy and the control over the trade and assets of SUR was transferred to
an independent trustee. No consideration was received. The net gain on
disposal has been treated as an adjusting item (see Note 3). At the date of
the disposal, the carrying amounts of SUR's net liabilities were as follows:
(unaudited)
£m
Property, plant and equipment 15.1
Right-of-use assets 27.9
Total non-current assets 43.0
Inventories 12.6
Trade and other receivables 4.3
Cash and cash equivalents 7.3
Total current assets 24.2
Trade and other payables (73.5)
Lease liabilities (10.1)
Total current liabilities (83.6)
Lease liabilities (18.0)
Other payables and accrued expenses (1.7)
Total non-current liabilities (19.7)
Total assets less total liabilities (36.1)
Net liabilities disposed of 36.1
Gain on disposal 36.1
Total consideration received in cash -
Cash and cash equivalents disposed of (7.3)
Net cash paid (7.3)
7. Divestments (continued)
Prior Period Divestments
Footasylum
On 5 August 2022, the Group disposed of its 100% equity interest in Footasylum
and its associated subsidiaries to Aurelius Group for a cash consideration of
£37.5m. The subsidiary was classified as held-for-sale in the 2022
Consolidated Financial Statements. The consideration was received fully in
cash in 2022. At the date of disposal, the carrying amounts of Footasylum's
net assets were as follows:
(unaudited)
£m
Intangible assets 6.7
Property, plant and equipment 27.0
Right-of-use assets 79.1
Deferred tax assets 0.2
Total non-current assets 113.0
Inventories 36.4
Trade and other receivables 24.9
Cash and cash equivalents 6.0
Total current assets 67.3
Trade and other payables (24.7)
Other tax and social security (3.7)
Accruals and deferred income (19.1)
Borrowings (3.5)
Lease liabilities (15.6)
Income tax liabilities (1.0)
Total current liabilities (67.6)
Accruals and deferred income (5.6)
Lease liabilities (59.8)
Total non-current liabilities (65.4)
Total assets less total liabilities 47.3
Net assets disposed of (47.3)
Costs to sell (5.0)
Loss on disposal (14.8)
Total consideration received in cash 37.5
Cash and cash equivalents disposed of (6.0)
Net cash received 31.5
In the 26 weeks to 30 July 2022, an impairment of £8.5m was recognised in
order to present the Footasylum assets held-for- sale at the lower of carrying
value and fair value less costs to sell in accordance with IFRS 5. A further
£6.3m loss had been recognised following the reversal of £8.3m of
right-of-use assets depreciation in order to cease depreciating these assets
at the point of classification as held-for-sale in accordance with IFRS 5 and
the release of a £2.0m provision for costs to sell that is no longer
required. This resulted in a higher loss on disposal of the assets of £14.8m
when compared to the impairment of £8.5m recognised in the 26 week period
ended 30 July 2022.
Other non-core fashion businesses
On 16 December 2022, the Group announced its plan to significantly simplify
its fashion branded offer through the divestment of 15 UK-based non-core
fashion businesses ('Divested Businesses'), for cash consideration of £44.5m,
in order to focus more fully on the opportunities across the rest of the
Group, in particular the international and digital expansion of the Group's
core premium Sports Fashion fascias.
Completion on the disposal of shares in eight of the Divested Businesses, and
on the disposal of all of the debt owing to JD by the Divested Businesses,
took place immediately on exchange. The initial eight divested businesses
were:
- Base Childrenswear Limited (80% equity interest);
- Dantra Limited (75% equity interest);
- PG2019 Limited (100% equity interest);
- Prevu Studio Limited (100% equity interest);
- Nicholas Deakins Limited (100% equity interest);
- Uggbugg Fashion Limited - including its subsidiary Missy
Empire Limited (51% equity interest);
- Clothingsites Holdings Limited - including its subsidiaries
Clothingsites.co.uk Limited and Old Brown Bag Clothing Limited (100% equity
interest); and
- WHCO Limited - including its subsidiaries The Watch Shop
Holdings Limited and Watch Shop Logistics Limited (100% equity interest).
7. Divestments (continued)
Other non-core fashion businesses (continued)
The consideration was received fully in cash during the period ended 28
January 2023. At the date of disposal, the carrying amounts of the initial
eight divested businesses net assets were as follows:
(unaudited)
£m
Intangible assets 22.6
Property, plant and equipment 3.9
Right-of-use assets 6.5
Total non-current assets 33.0
Inventories 29.8
Trade and other receivables 8.5
Cash and cash equivalents 16.4
Total current assets 54.7
Trade and other payables (19.7)
Provisions (0.1)
Borrowings (11.6)
Lease liabilities (7.4)
Income tax liabilities (0.3)
Total current liabilities (39.1)
Other payables and accrued expenses (1.5)
Total non-current liabilities (1.5)
Total assets less total liabilities 47.1
Total consideration received in cash 44.5
Intercompany debt (86.0)
Net assets disposed of (47.1)
Costs to sell (0.6)
Impairment of assets held-for-sale (Note 12) (17.5)
Loss on disposal (106.7)
Total consideration received in cash 44.5
Cash and cash equivalents disposed of (16.4)
Net cash received 28.1
Divestment of other non-controlling interests
During the period ended 28 January 2023, JD divested 5% of Kukri Sports
Limited and 10% of JD Canary Islands Sports S.L. as a result of options
exercised by non-controlling interests in the subsidiaries. In accordance with
IFRS 10, the Group had previously assessed and concluded that it controlled
the subsidiaries. As the divestment does not result in a change of control,
this has been accounted for as an equity transaction.
8. Put and Call Option Liabilities
Put and call options are in place over all or part of the remaining
non-controlling interest shareholding in various subsidiaries. The Group
recognises put and call options over non-controlling interests in its
subsidiary undertakings as a liability in the Consolidated Statement of
Financial Position at the present value of the estimated exercise price of the
put and call options. The only material put and call option remaining at 3
February 2024 is Genesis at £763.5m (2023: Genesis (restated) £782.9m, MIG
£52.4m, ISRG (restated) £206.4m).
The Group has used a third-party valuation expert to estimate the present
value of the Group's material put and call option liabilities using a
Monte-Carlo simulation model, applying a geometric Brownian motion to project
the share price and an arithmetic Brownian motion for the projection of
EBITDA. The option formula and multiple are usually stated in the option
agreement, allowing the strike price to be calculated from the simulated
EBITDA; however, in the absence of a specified formula or multiple, the Group
estimates this based on current evidence in the Mergers and Acquisitions
market and the Group's past experience of multiples paid for similar
businesses. Upon initial recognition of put and call options, a corresponding
entry is made to Other Equity (put and call option reserve), and for
subsequent changes on remeasurement of the liability the corresponding entry
is made to adjusting items in the Consolidated Income Statement.
8. Put and Call Option Liabilities (continued)
Inputs to the Monte-Carlo simulation models
The Group has used the Board approved 3-year plan to estimate profit
and cash flow forecasts for future periods.
In estimating the present value of the Group's material put and call option
liabilities, the key inputs to the Monte-Carlo simulation models are:
- The EBITDA forecasts and growth assumptions for future
periods, including forecast net cash/debt and forecast capital expenditure,
working capital movements and taxation.
- The EBITDA, which is projected using an Arithmetic Brownian
Motion using EBITDA drift. The drift for each time period is estimated from
forecast EBITDA and its standard deviation is estimated from historical EBITDA
data.
- The risk-free discount rates, reflecting the current market
assessment of the time value of money, used to discount the purchase price
(subject to the option pricing cap as defined in the shareholder agreement) to
the present value
Other
Options
Within Other Options the two largest value
options are Cosmos £23.7m (2023 (restated): £18.1m) and DTLR £13.9m (2023
(restated): £11.2m). Due to the value of these other options, management has
used a third party valuation specialist to value these options. The valuation
technique is outlined above. The valuation technique is consistent with that
outlined above for the material options. The remaining options are valued in
house, and total £46.3m (2023 (restated): £63.0m).
Iberian Sports Retail Group
('ISRG') Genesis Topco Inc Marketing Total Liability
Investment
£m ('Genesis') Group Other (unaudited)
£m S.A. ('MIG') £m £m
£m
At 30 January 2022 119.0 520.3 51.9 73.5 764.7
Effect of prior period restatement 58.2 - - 36.2 94.4
At 30 January 2022 - restated(1) 177.2 520.3 51.9 109.7 859.1
Acquisitions - restated(1) - - - 14.1 14.1
Options lapsed and disposed during the period - - - (17.6) (17.6)
Increase/(decrease) in the present value of the existing option liability -
restated(1)
29.2 262.6 0.5 (43.2) 249.1
At 28 January 2023 - restated(1) 206.4 782.9 52.4 63.0 1,104.7
Acquisitions (Note 6) 428.8 - - - 428.8
Options lapsed and disposed during the period (196.7) - - (5.0) (201.7)
Other movements - - - (13.2) (13.2)
Options bought out (Note 10) (434.6) - (68.7) - (503.3)
Increase/(decrease) in the present value of the existing option liability
(3.9) (19.4) 16.3 1.5 (5.5)
At 3 February 2024 - 763.5 - 46.3 809.8
(1) Please refer to Note 15 for further details of the
restatement.
8. Put and Call Option Liabilities (continued)
Sensitivity Analysis - Genesis Put and Call Option
Sensitivity analysis was performed over the key
variable inputs to the valuation of the Genesis put and call option. The key
variable inputs were determined to be the EBITDA forecasts per the Board
approved 3-year plan. 10% was determined to be a reasonably possible change
for the EBITDA forecasts included in the approved cash flow forecasts,
reflecting recent experience in levels of forecasting accuracy. The result was
that:
- A reduction of 10% to the forecast EBITDA would result in a reduction to the
put and call option liability of £91.8m.
Option Details
Current options - Options details
Company Options in Exercise Methodology Maximum Short-term Discount Recognised at
existence periods price EBITDA rate 3 February
growth applied 2024
assumptions (unaudited)
£m
Genesis Topco Put option whereby JD Sports Fashion Plc may be required to acquire the The put options are exercisable within 30 calendar days after the The option price is calculated based on a multiple of earnings before The option price shall not exceed £1.46 billion. 6.4% - 12.5% 3.3% - 4.8% 763.5
remaining 20% of the issued share capital of Genesis Topco Inc in four equal determination of the final put/call value for the financial period. The first interest, tax, depreciation and amortisation for the relevant financial
Inc. tranches with the ability to roll over a tranche that has not previously been put period will occur after the determination of the put/call value for the period, less post-closing cash and debt.
subject to the exercise of a put option. financial period ending on 1 February 2025. The final put option can be
exercised within a period of 30 calendar days after the end of the fiscal
period ending 1 February 2028.
Other put option liabilities 46.3
Total liability 809.8
9. Dividends
Dividend distribution to the Company's shareholders is recognised as a
liability in the Group and Company financial statements in the period in which
it is approved.
After the reporting date, the following dividend was proposed by the Directors
and will be payable to all shareholders on the register at 12 July 2024. The
dividends were not provided for at the reporting date.
53 weeks to 52 weeks to
3 February 28 January
2024 2023
(unaudited) (unaudited)
£m £m
0.60 pence per ordinary share (2023: 0.67 pence) 31.1 34.6
Dividends on Issued Ordinary Share Capital
53 weeks to 52 weeks to
3 February 28 January
2024 2023
(unaudited) (unaudited)
£m £m
Final dividend of 0.67 pence (2023: 0.35 pence) per qualifying ordinary share
paid in respect of prior period, but not recognised as a liability in that
period 34.6 18.1
Interim dividend of 0.30 pence (2023: 0.13 pence) per qualifying ordinary
share paid in respect of current period
15.5 6.7
50.1 24.8
10. Analysis of Net Debt
Net debt consists of cash and cash equivalents together with other borrowings
from bank loans and overdrafts, other loans, loan notes, lease liabilities and
similar hire purchase contracts.
As reported Restated((1)) On acquisition/ disposal of subsidiaries Restated(1)
At 30 Prior period restatement((1)) At 30 £m At 28
January 2022 2022 January 2022 FX Non-cash movements((2)) January 2023
£m £m £m Cash flow movement £m (unaudited)
£m £m £m
Cash and cash equivalents 1,314.0 - 1,314.0 1.1 205.8 (12.9) - 1,508.0
Overdrafts (33.6) - (33.6) - - - - (33.6)
Cash and cash equivalents held-for-sale(3)
- - - - 74.5 - - 74.5
Cash and cash equivalents for the purposes of the Consolidated Statement of
Cash Flows
1,280.4 - 1,280.4 1.1 280.3 (12.9) - 1,548.9
Bank loans (94.5) - (94.5) (3.8) 21.9 (3.2) - (79.6)
Lease liabilities (restated(1)) (2,242.9) (43.3) (2,286.2) (2.7) 393.0 (95.7) (392.4) (2,384.0)
Total liabilities from financing activities (2,337.4) (43.3) (2,380.7) (6.5) 414.9 (98.9) (392.4) (2,463.6)
Net (debt)/cash (1,057.0) (43.3) (1,100.3) (5.4) 695.2 (111.8) (392.4) (914.7)
As reported Restated((1))
At 28 Prior period restatement((1)) At 28 On acquisition of subsidiaries At 3 February
January 2023 2023 January 2023 £m FX Non-cash movements((2)) 2024
£m £m £m Cash flow movement £m (unaudited)
£m £m £m
Cash and cash equivalents 1,582.5 (74.5) 1,508.0 - (326.6) (28.7) - 1,152.7
Overdrafts (33.6) - (33.6) - (25.2) (1.1) - (59.9)
Cash and cash equivalents held-for-sale(3)
- 74.5 74.5 - (65.7) - - 8.8
Cash and cash equivalents for the purposes of the Consolidated Statement of
Cash Flows
1,548.9 - 1,548.9 - (417.6) (29.7) - 1,101.6
Bank loans (4) (79.6) - (79.6) 5.0 5.8 (0.8) - (69.6)
Lease liabilities (restated(1)) (2,339.2) (44.8) (2,384.0) - 400.0 41.0 (541.0) (2,484.0)
Total liabilities from financing activities (2,418.8) (44.8) (2,463.6) 5.0 405.8 40.2 (541.0) (2,553.6)
Net (debt)/cash (869.9) (44.8) (914.7) 5.0 (11.8) 10.5 (541.0) (1,452.0)
(1) Please refer to Note 15 for further details of the
restatement.
(2) Other movements for the period ended 3 February 2024 include
additional lease drawdowns of £592.8m and remeasurements credit of £51.8m
(at 28 January 2023 this includes £420.3m of lease drawdowns and credit of
£27.9m).
(3) See Note 14 for details of assets held-for-sale.
(4) £5m relates to the divestment of Gymnation. See Note 7 for
further details.
10. Analysis of Net Debt
(continued)
In addition to the liabilities included in the table above the Group, has
accrued put and call option liabilities at 3 February 2024 of £809.8m (2023:
£1,104.7m). £551.8m is included in financing activities in the Consolidated
Statement of Cash Flows for the acquisition of non-controlling interest (NCI).
Of this cash outflow £503.3m relates to the purchase of NCI where the Group
held put and call options on the minority interest. The remaining £48.5m is
related to acquisition of NCI with no associated put and call options.
In addition to the liabilities included in the table above the Group had
accrued put and call option liabilities at 28 January 2023 of £1,104.7m
(2022: £859.1m). £29.3m is included in financing activities in the
Consolidated Statement of Cash Flows for the acquisition and divestment of
NCI. Of this cash outflow £14.1m (restated) relates to the purchase of NCI
where the Group held put and call options on the minority interest. The
remaining £15.2m is related to acquisition of NCI with no associated put and
call options.
11. Related Party Transactions and Balances
Transactions and balances with each category of related parties during the
period are shown below. Outstanding balances are unsecured (unless otherwise
stated) and will be settled in cash.
Transactions with Related Parties who are not Members of the Group
Pentland Group Limited
During the financial period, Pentland Group Limited and its subsidiaries owned
51.6% (2023: 51.6%) of the issued ordinary share capital of JD Sports Fashion
Plc. The Group made purchases of inventory from Pentland Group Limited in the
period and the Group also sold inventory to Pentland Group Limited. The Group
also paid royalty costs to Pentland Group Limited for the use of a brand.
During the period, the Group entered into the following transactions with
Pentland Group Limited:
Income from related parties Expenditure with related parties Income from related parties Expenditure with related parties
2024 2024 2023 2023
(unaudited) (unaudited) (unaudited) (unaudited)
£m £m £m £m
Sale of inventory 0.3 - 1.2
-
Purchase of inventory - (32.3) - (43.3)
Royalty costs - (5.1) - (4.0)
Marketing costs - - - (0.4)
Dividends - (26.0) - (12.8)
At the end of the period, the following balances were outstanding with
Pentland Group Limited:
Amounts owed by related parties Amounts owed to related parties Amounts owed by related parties Amounts owed to related parties
2024 2024 2023 2023
(unaudited) (unaudited) (unaudited) (unaudited)
£m £m £m £m
Trade receivables/(payables) - (1.3) 0.4 (4.9)
Associates and Joint Ventures
During the period, the Group entered into the following transactions with its
associates and joint ventures:
Income from Expenditure with Income from Expenditure with
related parties related parties related parties related parties
2024 2024 2023 2023
(unaudited) (unaudited) (unaudited) (unaudited)
£m £m £m £m
Sale of inventory - - 0.1 -
Purchase of inventory - (3.3) - (12.4)
Recharge of expenses 1.9 - 2.6 -
Dividends and distributions received - - 3.4 -
At the end of the period, the Group had the following balances outstanding
with its associates and joint ventures:
Amounts owed by related parties Amounts owed to related parties Amounts owed by related parties Amounts owed to related parties
2024 2024 2023 2023
(unaudited) (unaudited) (unaudited) (unaudited)
£m £m £m £m
Trade receivables 3.8 - 2.9 -
Loans receivable in less than 1 year 0.4 - 0.2 -
Loans receivable in more than 1 year - - 7.6 -
Trade payables - - - (1.0)
Other receivables from associates and joint ventures relate to costs incurred
by the Group on behalf of these entities, which have then been recharged. The
loan receivable in less than one year of £0.4m (2023: £0.2m) is presented
within other receivables within current assets.
In addition to the above transactions a number of non-controlling interest
buyout transactions occurred in the course of the financial period, as
disclosed in Note 6.
11. Related Party Transactions and Balances (continued)
Transactions with Directors and Key Management Personnel
During the period, the Group entered into the following transactions with its
key management personnel:
Income from Expenditure with related parties Income from Expenditure with related parties
related parties 2024 related parties 2023
2024 (unaudited) 2023 (unaudited)
(unaudited) £m (unaudited) £m
£m £m
Property rental - 10.8 - 10.8
At the end of the period, the Group had the following balances outstanding
with its key management personnel:
Amounts owed by related parties Amounts owed to related parties Amounts owed by related parties Amounts owed to related parties
2024 2024 2023 2023
(unaudited) (unaudited) (unaudited) (unaudited)
£m £m £m £m
Trade receivables/(payables) - 0.9 - 0.6
Transactions with key management personnel
Members of the Board of Directors and Executive Committee of JD Sports Fashion
Plc are deemed to be key management personnel. The Executive Committee are
comprised Heads of Centres of Excellence and Heads of Business Units as
outlined in the Annual Report.
Cost of key management personnel compensation for the financial year as
follows:
2024 2023
(unaudited) (unaudited)
£m £m
Salaries and short-term benefits 13.1 16.3
Pensions and cash in lieu of pensions 0.1 0.1
13.2 16.4
Attributable to:
The Board of Directors (including Non-executive Directors) 4.6 6.9
Executive Committee (members not on the Board of Directors) 8.6 9.5
13.2 16.4
At 3 February At 28 January
2024 2023
Number of key management personnel 11 13
The JD Foundation
The JD Foundation receives its income from, but is independent of, JD Sports
Fashion Plc. The Foundation is dependent on all income net of VAT arising from
the sale of single use carrier bags in JD stores in England, Scotland, Wales,
Northern Ireland and other European countries, as well as micro-donations from
customers at the store point of sale and colleague donations and fundraising.
During the period, the Group entered into the following transactions with The
JD Foundation:
Income from Expenditure with related parties Income from Expenditure with related parties
related parties 2024 related parties 2023
2024 (unaudited) 2023 (unaudited)
(unaudited) £m (unaudited) £m
£m £m
Donations - (2.6) - (1.7)
12. Held-for-sale
Mainline Menswear Holdings Limited
At 3 February 2024, Mainline Menswear Holdings Limited ('Mainline Menswear')
was classified as held-for-sale at 3 February 2024 in line with the conditions
of IFRS 5. As at 3 February 2024, the sale process was ongoing and Mainline
Menswear and its associated subsidiaries were held at the lower of carrying
value or fair value less costs to sell. A reconciliation is provided in the
table below.
Mainline Menswear Holdings and its subsidiary Mainline Menswear Limited
specialise in the retail of premium branded men's apparel and footwear. The
group forms part of the Sports Fashion segment (see Note 2) and was initially
marketed for sale in July 2023.
Included in the 53 week period ended 3 February 2024 was revenue of £75.2m
and a profit before tax of £10.8m in respect of Mainline Menswear Holdings
and its subsidiaries.
As at 3 February
2024
(unaudited)
£m
Intangible assets 7.5
Property, plant and equipment 0.5
Right-of-use assets 0.2
Inventories 14.8
Trade and other receivables 1.9
Income tax receivable 0.1
Cash and cash equivalents 8.8
Assets held-for-sale 33.8
Lease liabilities (0.2)
Trade and other payables (8.0)
Liabilities held-for-sale (8.2)
Non-core fashion businesses
Seven of the Group's non-core fashion businesses were held-for-sale as at 28
January 2023. In addition, the Group agreed to the sale of Source Lab Limited
('Source Lab') to its non-controlling interest prior to 28 January 2023 and
this completed on 28 February 2023. Therefore this business also was
held-for-sale as at 28 January 2023. All businesses formed part of the Sports
Fashion reportable segment (see Note 2).
As at 3 February 2024, all the divestments had taken place (see Note 7 for
more detail on the divestments).
Included in the 52 week period ended 28 January 2023 was revenue of £223.8m
and a loss before tax of £6.9m in respect of the non-core fashion entities
held-for-sale. There was also revenue of £7.0m and a profit before tax of
£0.6m in respect of Source Lab.
Included in the 53 week period ended 3 February 2024 was revenue of £4.6m and
a loss before tax of £0.2m in respect of the non-core fashion entities
held-for-sale. There was also revenue of £0.5m and a profit before tax of
£0.1m in respect of Source Lab.
12. Held-for-sale (continued)
As at 28 January 2023, the non-core fashion businesses and Source Lab were
held at the lower of carrying value or fair value less costs to sell. A
reconciliation is provided in the table below.
Restated (1)
As at 28 January
Non-core fashion
businesses Source lab 2023
£m £m (unaudited)
£m
Intangible assets 9.2 - 9.2
Property, plant and equipment 17.1 0.1 17.2
Right-of-use assets 30.8 - 30.8
Inventories 51.9 0.8 52.7
Trade and other receivables 11.9 1.2 13.1
Cash and cash equivalents 72.3 2.2 74.5
Assets held-for-sale 193.2 4.3 197.5
Lease liabilities (32.1) - (32.1)
Trade and other payables (131.7) (1.4) (133.1)
Provisions (0.4) - (0.4)
Liabilities held-for-sale (164.2) (1.4) (165.6)
(1) Please refer to Note 15 for further details of the
restatement.
Restated (1)
As at 28 January
2023
(unaudited)
£m
Reconciliation to lower of fair value less costs to sell or carrying value
Net assets held-for-sale 31.9
Intercompany liabilities currently eliminating on consolidation (9.9)
Impairment to lower of fair value less costs to sell (Note 7) (17.5)
Cash consideration due to be received on completion 4.5
(1) Please refer to Note 15 for further details of the
restatement.
13. Contingent Liabilities
Accounting policies
Contingent liabilities are potential future cash outflows, where the
likelihood of payment is considered more than remote but is not considered
probable or cannot be fully measured.
Claims and Litigation
The activities of the Group are overseen by regulators around the world and,
whilst the Group strives to ensure full compliance with all its regulatory
obligations, periodic reviews are inevitable which may result in a financial
penalty. If the risk of a financial penalty arising from one of these reviews
is more than remote but not probable or cannot be measured reliably then the
Group will disclose this matter as a contingent liability. If the risk of a
financial penalty is considered probable and can be measured reliably then the
Group would make a provision for this matter.
CMA Investigation
On 23 September 2021, the CMA launched an investigation under section 25 of
the Competition Act 1998 into suspected breaches of competition law by
Leicester City Football Club Limited and JD, together with their affiliates.
In the period ended 28 January 2023, the Group reported that there was
insufficient certainty that a liability would arise and no provision was made
in the financial accounts. On 31 July 2023, the CMA issued a decision finding
that JD and Leicester City Football Club Limited broke competition law,
however, on the basis that JD reported the conduct to the CMA, no fine was
issued to JD.
14. Post Balance Sheet Events
Disposal of 50.1% shareholding in Bodytone
On 7 March 2024, Iberian Sports Retail Group S.L. ("ISRG") disposed of its
50.1% shareholding in Bodytone International Sport S.L. The shares were sold
back to founder management, for total consideration of €2.4m. The divestment
aligns with the Group's four strategic pillars.
Franchise agreement with The Foschini Retail Group
On 8 March 2024, JD Sports Fashion Plc signed a franchise agreement with
Foschini Retail Group (Pty) Limited (a subsidiary of The Foschini Group
Limited) to expand the JD footprint into the South African market.
Acquisition of the trade and assets of Simply Gyms
On 18 March 2024, JD Gyms acquired the trade and assets of four 'Simply Gym'
sites from Bay Leisure Limited for £3.4m (of which £0.7m was deferred). The
sites will be converted to JD Gyms under a phased conversion programme.
Acquisition of the minority shareholdings in Sport Zone Canaries (40%) and JD
Canaries (10%)
On 8 April 2024, JD Spain Sports Fashion 2010 S.L. acquired the 10% minority
shareholding in JD Canary Islands Sports S.L. and SDSR - Sports Division SR,
S.A. (Sport Zone Portugal) acquired the 40% minority shareholding in Sport
Zone Canarias (SL). Total consideration for both shareholdings was €19.9m.
The JD Canary acquisition aligns with the JD Brand First strategy whilst the
Sport Zone Portugal acquisition promotes the JD Complementary Concepts.
Acquisition of 100% of Hibbett, Inc.
On 23 April 2024, the Group entered into a binding agreement to acquire 100%
of Hibbett Inc. ('Hibbett'), a company listed on the Nasdaq Stock Market, for
$87.50 per share. Genesis Holdings Inc. will acquire 100% of the shares in
Hibbett. The Group will fund the total consideration payable of c.$1,083
million (c.£878 million), and expects to refinance Hibbett, Inc.'s existing
debt, . through a combination of existing US cash resources of $300 million
and a $1,000 million extension to the Group's existing bank facilities,
pending finance approval.
15. Prior Period Adjustments
The Group identified a number of prior period adjustments, impacting the
opening position at 30 January 2022, 28 January 2023 and the year ended 3
February 2024. The impact of the prior period adjustments on the primary
statements is presented in the tables below.
Put and Call Options ISRG Put and Call Option
During the financial period ended 3 February 2024, the Group reviewed the
accounting for put and call options and noted a put and call option obligation
that was not previously recorded, but which should have been recognised in
relation to the buy/sell agreement with Sonae Holdings, S.A., which held
29.99% of Iberian Sports Retail Group SL. Accordingly, the Group has restated
the amounts at 30 January 2022 to recognise the present value of that
obligation by increasing the put and call option liabilities by £58.2
million, with a debit to the put and call option reserve of £15.1m and a
brought forward retained earnings impact of £43.1m. The subsequent
remeasurement of that obligation during the period ended 28 January 2023 has
also been recorded as a prior period adjustment, resulting in an increase in
the put and call option liability of £9.6 million with a corresponding charge
to the FY23 income statement.
Other Options
Following the identification of the above ISRG restatement, the Group reviewed
the accounting for other put and call options and concluded that there were
also adjustments required to correct the historic accounting in respect of
those options. Notably, it was identified that the purchase price cap that is
contained within the Genesis Topco Inc put and call option agreement had not
been correctly factored in to the put and call option liability valuation in
the prior period. It was also identified that the Group had used inappropriate
discount rates to measure certain put and call liabilities and had failed to
identify service provisions within certain other agreements. Consequently, the
Group has restated the amounts at 30 January 2022 and 28 January 2023 which
impacted:
- the Group's net assets at 30 January 2022 by £36.1m, with a
corresponding impact on retained earnings of £39.5m and on the put and call
option reserve of £3.4m; and
- the put and call option liabilities at 28 January 2023 by a
further £60.4m, with a corresponding impact on retained earnings of £55.4m
and on the put and call option reserve of £5m.
Reclassifications
It was identified during the financial period ended 3 February 2024 that as at
28 January 2023, certain put and call options exercisable within 12 months
were incorrectly stated as non-current in the Group's balance sheet. This has
been corrected through a prior period restatement to reclassify £150.5m to
current liabilities.
It was also identified during the financial period ended 3 February 2024 that
the Group had previously been recording the remeasurement charge in relation
to put and call option valuations as an adjusting item within administrative
expenses within the income statement. As the movement relates to options
over the Group's own equity, it is financing in nature and should be presented
as an adjusting item within finance expenses. Accordingly, a reclassification
has been made in the income statement for the period ended 28 January 2023 in
the amount of £268.8m.
The tables below reconcile the overall movement in the financial statements in
relation to the prior period adjustments outlined above:
52 weeks to 30 January 2022
ISRG Put and Call
Option Other options Net impact
£m £m (unaudited)
£m
Net assets (36.1) (94.3)
(58.2)
Retained earnings (39.5) (82.6)
(43.1)
Put and call option reserve 3.4 (11.7)
(15.1)
15. Prior Period Adjustments (continued)
Cumulative impact as at 30 January ISRG Put and Call Option
Other options Reclassifications Net impact
2022 £m £m £m (unaudited)
£m
Administrative expenses - (9.6) 37.2 268.6 296.2
Finance expenses - - 18.2 (268.6) (250.4)
Profit for the period - (9.6) 55.4 - 45.8
Current put and call option liabilities (184.4) (184.4)
Non-current put and call option liabilities (94.3) (9.6) 60.4 184.4 140.9
Net assets (94.3) (9.6) 60.4 - (43.5)
Retained earnings (82.6) (9.6) 55.4 - (36.8)
Put and call option reserve (11.7) - 5.0 - (6.7)
Leases
During the financial period ended 3 February 2024, the Group reviewed the
leases portfolio and identified property leases that should have been
recognised in prior periods. Accordingly, the Group has restated the
right-of-use assets and corresponding lease liabilities as at 30 January 2022
and 28 January 2023 amounting to £52.0m and £66.9m, respectively. The Group
has also identified an overstatement of leases in MIG resulting in restatement
of right-of-use assets and corresponding lease liabilities as at 30 January
2022 and 28 January 2023 amounting to £8.7m and £22.1m, respectively. The
net impact to right-of- use assets and lease liabilities as at 30 January 2022
and 28 January 2023 amounts to £43.3m and £44.8m, respectively.
Foreign Exchange
During the financial period ended 3 February 2024, the Group reviewed the
foreign currency translation of goodwill and fascia names and identified an
error in foreign currency translation arising from accounting of prior period
acquisitions resulting in the understatement of goodwill and fascia balances
and overstatement of foreign currency translation reserve. Accordingly, the
Group has restated the goodwill and fascia balances and related foreign
currency translation reserve as at 30 January 2022 by £41.1m.
Supplier Rebates
During the financial period ended 3 February 2024, the Group reviewed the
accounting for supplier rebates related to marketing initiative support and
concluded that such rebates should be recognised within cost of sales instead
of being recognised within administrative expenses. Accordingly, the Group has
restated the related supplier rebates costs for the period ended 28 January
2023 amounting to £37.9m.
Assets Held-for-Sale
During the financial period ended 3 February 2024, the Group reviewed the
assets held-for-sale and identified a reclassification adjustment from cash
and cash equivalents to assets held-for-sale. Accordingly, the Group has
restated the cash and cash equivalents and assets held-for-sale as at 28
January 2023 amounting to £74.5m related to Non-core fashion businesses.
Cash flow
The cashflow has been represented for the items noted above. In addition, in
prior periods the Group adopted an accounting policy which presented the cash
flows from forward contracts for the purchase of foreign currencies net within
working capital. In the current year the Group has determined that separate
presentation of the fair value movements of these derivatives is more useful
for the analysis of the group's cash flows when presented as a single line
within the reconciliation from profit after tax to cashflows from operations.
The prior period has been represented to reflect the accounting policy change.
Other Amendments
When preparing the FY24 financial statements, we have made other immaterial
presentational changes and applied these consistently in the comparative
periods.
15. Prior Period Adjustments (continued)
The following tables summarize the annual Consolidated Statements for the
periods indicated, giving effect to the restatements described above.
Consolidated Income Statement
For the 52 week period ended 28 January 2023
Reported Put and call options Supplier Rebates Restated
£m £m £m (unaudited)
£m
Revenue 10,125.0 - - 10,125.0
Cost of Sales (5,285.3) - 37.9 (5,247.4)
Gross profit 4,839.7 - 37.9 4,877.6
Selling and distribution expenses (3,315.6) - (37.9) (3,353.5)
Administrative expenses - before adjusting items (497.3) - - (497.3)
Administrative expenses - adjusting items (550.5) 296.2 - (254.3)
Administrative expenses - total (1,047.8) 296.2 - (751.6)
Share of profit of equity-accounted investees 4.9 - - 4.9
Other operating income 28.6 - - 28.6
Operating profit before financing 509.8 296.2 - 806.0
Finance income 8.4 - - 8.4
Finance expenses (77.3) (250.4) - (327.7)
Net finance expense (68.9) (250.4) - (319.3)
Profit before tax 440.9 45.8 - 486.7
Income tax expense (214.2) - - (214.2)
Profit for the period 226.7 45.8 - 272.5
Attributable to equity holders of the parent 142.5 45.8 - 188.3
Attributable to non-controlling interest 84.2 - - 84.2
Basic earnings per ordinary share 2.76p 0.89p - 3.65p
Diluted earnings per ordinary share 2.76p 0.89p - 3.65p
Consolidated Statement of Comprehensive Income
For the 52 week period ended 28 January 2023
Put and call options
Reported £m Supplier Rebates Restated
£m £m (unaudited)
£m
Profit for the period 226.7 45.8 - 272.5
Other comprehensive income:
Items that may be classified subsequently to the Consolidated Income
Statement:
Exchange differences on translation of foreign balances 129.9 - - 129.9
Total other comprehensive income for the period 129.9 - - 129.9
Total comprehensive income and expense for the period (net of income tax)
356.6 45.8 - 402.4
Attributable to equity holders of the parent 238.4 45.8 - 284.2
Attributable to non-controlling interest 118.2 - - 118.2
15. Prior Period Adjustments (continued)
Consolidated Statement of Financial Position
For the 52 week period ended 28 January 2023
Put and call options Foreign exchange Assets Held-for-Sale
Reported £m Leases £m £m Restated
£m £m (unaudited)
£m
Non-current assets
Intangible assets 1,459.4 - - 41.1 - 1,500.5
Property, plant and equipment 875.6 - - - - 875.6
Right-of-use assets 2,137.0 - 44.8 - - 2,181.8
Investments in associates and joint ventures 38.8 - - - - 38.8
Other assets 56.9 - - - - 56.9
Trade and other receivables 8.4 - - - - 8.4
Deferred tax assets 12.9 - - - - 12.9
Total non-current assets 4,589.0 - 44.8 41.1 - 4,674.9
Current assets -
Inventories 1,466.4 - - - - 1,466.4
Trade and other receivables 263.8 - - - - 263.8
Cash and cash equivalents 1,582.5 - - - (74.5) 1,508.0
Current assets excluding held-for-sale 3,312.7 - - - (74.5) 3,238.2
Assets held-for-sale 123.0 - - - 74.5 197.5
Total current assets 3,435.7 - - - - 3,435.7
Total assets 8,024.7 - 44.8 41.1 - 8,110.6
Current liabilities
Interest-bearing loans and borrowings (75.2) - - - - (75.2)
Lease liabilities (423.8) - (6.3) - - (430.1)
Trade and other payables (1,471.2) - - - - (1,471.2)
Put and call option liabilities - (184.4) - - - (184.4)
Provisions (9.7) - - - - (9.7)
Income tax liabilities (17.5) - - - - (17.5)
Current liabilities excluding held-for-sale (1,997.4) (184.4) (6.3) - - (2,188.1)
Liabilities held-for-sale (165.6) - - - - (165.6)
Total current liabilities (2,163.0) (184.4) (6.3) - - (2,353.7)
Non-current liabilities -
Interest-bearing loans and borrowings (38.0) - - - - (38.0)
Lease liabilities (1,915.4) - (38.5) - - (1,953.9)
Other payables (102.4) - - - - (102.4)
Put and call option liabilities (1,061.2) 140.9 - - - (920.3)
Provisions (21.1) - - - - (21.1)
Deferred tax liabilities (90.2) - - - - (90.2)
Total non-current liabilities (3,228.3) 140.9 (38.5) - - (3,125.9)
Total liabilities (5,391.3) (43.5) (44.8) - - (5,479.6)
Net assets 2,633.4 (43.5) - 41.1 - 2,631.0
Capital and reserves
Issued ordinary share capital 2.5 - - - - 2.5
Share premium 467.5 - - - - 467.5
Retained earnings 2,011.4 (36.8) - - - 1,974.6
Share based payment reserve 0.3 - - - - 0.3
Foreign exchange translation reserve 55.7 - - 41.1 - 96.8
Put and call option reserve (417.9) (6.7) - - - (424.6)
Total equity attributable to equity holders of the parent 2,119.5 (43.5) - 41.1 - 2,117.1
Non-controlling interest 513.9 - - - - 513.9
Total equity 2,633.4 (43.5) - 41.1 - 2,631.0
15. Prior Period Adjustments (continued)
Consolidated Statement of Financial Position (continued)
For the 52 week period ended 30 January 2022
Put and call options Foreign exchange
Reported £m Leases £m Restated
£m £m (unaudited)
£m
Non-current assets
Intangible assets 1,473.6 - - 41.1 1,514.7
Property, plant and equipment 688.5 - - - 688.5
Right-of-use assets 2,032.6 - 43.3 - 2,075.9
Investments in associates and joint ventures 56.2 - - - 56.2
Other assets 57.0 - - - 57.0
Trade and other receivables 2.5 - - - 2.5
Deferred tax assets 81.7 - - - 81.7
Total non-current assets 4,392.1 - 43.3 41.1 4,476.5
Current assets
Inventories 989.4 - - - 989.4
Trade and other receivables 215.4 - - - 215.4
Income tax receivables 0.6 - - - 0.6
Cash and cash equivalents 1,314.0 - - - 1,314.0
Current assets excluding held-for-sale
Assets held-for-sale 157.1 - - - 157.1
Total current assets 2,676.5 - - - 2,676.5
Total assets 7,068.6 - 43.3 41.1 7,153.0
Current liabilities
Interest-bearing loans and borrowings (72.6) - - - (72.6)
Lease liabilities (379.0) - (5.6) - (384.6)
Trade and other payables (1,279.5) - - - (1,279.5)
Put and call option liabilities - (97.1) - - (97.1)
Provisions (13.2) - - - (13.2)
Current liabilities excluding held-for-sale
Liabilities held-for-sale (142.6) - - - (142.6)
Total current liabilities (1,886.9) (97.1) (5.6) - (1,989.6)
Non-current liabilities
Interest-bearing loans and borrowings (55.5) - - - (55.5)
Lease liabilities (1,863.9) - (37.7) - (1,901.6)
Other payables (10.6) - - - (10.6)
Put and call option liabilities (764.8) 2.8 - - (762.0)
Provisions (19.9) - - - (19.9)
Deferred tax liabilities (127.4) - - - (127.4)
Total non-current liabilities (2,842.1) 2.8 (37.7) - (2,877.0)
Total liabilities (4,729.0) (94.3) (43.3) - (4,866.6)
Net assets 2,339.6 (94.3) - 41.1 2,286.4
Capital and reserves
Issued ordinary share capital 2.5 - - - 2.5
Share premium 467.5 - - - 467.5
Retained earnings 1,910.6 (82.6) - - 1,828.0
Share based payment reserve 0.1 - - - 0.1
Foreign exchange translation reserve (40.1) - - 41.1 1.0
Put and call option reserve (414.6) (11.7) - - (426.3)
Total equity attributable to equity holders of the parent 1,926.0 (94.3) - 41.1 1,872.8
Non-controlling interest 413.6 - - - 413.6
Total equity 2,339.6 (94.3) - 41.1 2,286.4
15. Prior Period Adjustments (continued)
Consolidated Statement of Cash Flows
For the 52 week period ended 28 January 2023
Reported Adjustment Restated
£m £m (unaudited)
£m
Cash flows from operating activities
Profit for the 272.5
period
226.7 45.8
Adjustments for:
Income tax 214.2
expense
214.2 -
Financial 77.3
expenses
77.3 -
Financial (8.4)
income
(8.4) -
Depreciation and amortisation of non-current 633.2
assets
633.2 -
Foreign exchange gains on monetary assets and 2.5
liabilities
2.5 -
Loss on disposal of non-current 5.1
assets
5.1 -
Gain/loss on FX forward contracts (recorded in Cost of 32.2
sales)
- 32.2
Impairment of other intangibles and non-current assets 3.4
(non-adjusting)
3.4 -
Impairment of goodwill and fascia names 117.6
(adjusting)
117.6 -
Impairment of investments in associates and joint ventures 19.6
(adjusting)
19.6 -
Impairment of other intangibles and non-current assets 6.0
(adjusting)
6.0 -
Other non-cash adjusting 361.5
items
407.3 (45.8)
Share of profit of equity-accounted investees (net of (4.9)
tax)
(4.9) -
Profit before working capital 1,731.8
changes
1,699.6 32.2
Decrease/(Increase) in (501.3)
inventories
(501.3) -
Decrease/(Increase) in trade and other (49.0)
receivables
(42.2) (6.8)
(Decrease)/Increase in trade and other 151.7
payables
177.1 (25.4)
Cash generated from 1,333.2
operations
1,333.2 -
Interest (8.4)
paid
(8.4)
-
Lease interest (68.9)
paid
(68.9) -
Income taxes (174.4)
paid
(174.4) -
Net cash from operating 1,081.5
activities
1,081.5 -
Cash flows from investing activities:
Interest 8.4
received
8.4 -
Proceeds from sale of non-current 11.5
assets
11.5 -
Acquisition of intangible (19.9)
assets
(19.9) -
Acquisition of property, plant and (326.6)
equipment
(326.6) -
Acquisition of other non-current (12.8)
assets
(12.8) -
Drawdown of lease 7.5
liabilities
7.5
-
Dividends received from equity-accounted 3.4
investees
3.4 -
Cash consideration of disposals (net of cash 59.6
disposed)
59.6 -
Investment in associates and joint (2.8)
ventures
(2.8) -
Acquisition of subsidiaries (net of cash (20.0)
acquired)
(20.0) -
Net cash used in investing (291.7)
activities
(291.7)
-
Cash flows from financing activities:
Repayment of interest-bearing loans and (37.4)
borrowings
(37.4) -
Drawdown of interest-bearing loans and 15.5
borrowings
15.5 -
Repayment of lease (400.5)
liabilities
(400.5)
-
Deferred consideration (29.2)
paid((1))
(29.2) -
Divestment of non-controlling 0.1
interests
0.1 -
Acquisition of non-controlling (29.3)
interests
(29.3)
-
Equity dividends (24.8)
paid
(24.8) -
Dividends paid to non-controlling interests in (2.8)
subsidiaries
(2.8) -
Net cash used in financing (508.4)
activities
(508.4) -
Net increase in cash and cash 281.4
equivalents
281.4 -
Cash and cash equivalents at the beginning of the 1,280.4
period
1,280.4 -
Foreign exchange losses on cash and cash (12.9)
equivalents
(12.9) -
Cash and cash equivalents at the end of the 1,548.9
period
1,548.9 -
(1) Deferred consideration paid has been represented within
financing activities having previously been classified as investing.
Classification as financing more accurately reflects the nature of the cash
flow.
Alternative Performance
Measures
The Directors measure the performance of the Group based on a range of
financial measures, including measures not recognised by UK-adopted
International Financial Reporting Standards. These Alternative Performance
Measures may not be directly comparable with other companies' Alternative
Performance Measures and the Directors do not intend these to be a substitute
for, or superior to, IFRS measures. The Directors believe that these
Alternative Performance Measures assist in providing additional useful
information on the trading performance of the Group. Alternative Performance
Measures are also used to enhance the comparability of information between
reporting periods, by excluding adjusting items. The Group's operating and
reportable segments under IFRS 8 are Sports Fashion and Outdoor, however, more
granular information is provided within these Alternative Performance Measures
which the Directors believe will further enhance the readers understanding of
the Group.
Adjusted Basic Earnings per Share
The calculation of basic earnings per share is detailed in Note 5 to the
financial statements. Adjusted basic earnings per ordinary share has been
based on the profit for the period attributable to equity holders of the
parent for each financial period but excluding the post-tax effect of certain
adjusting items. A reconciliation between basic earnings per share and
adjusted basic earnings per share is shown below:
Restated((1))
2024 2023
(unaudited) (unaudited)
Basic earnings per share per Note 5 10.45p 3.65p
Adjusting items 2.05p 9.79p
Tax relating to adjusting items (0.36)p (0.05)p
Adjusted basic earnings per ordinary share 12.14p 13.39p
(1) Please refer to Note 15 for further details of the
restatement.
Adjusting
Items
For the financial period ended 3 February 2024, the Group has updated the
presentation of the Consolidated Income Statement to a three-column format to
show adjusting items against the relevant income statement line item. The term
'adjusting items', as opposed to 'adjusted items' that was used in the prior
financial period, has been updated as has the definition of adjusting items to
include the impairment of loan receivables not recoverable. These updates are
intended to provide enhanced disclosure and greater clarity over what is
classified as an adjusting item and, by being more specific in terms of
defining the adjusting items, results in the provision of more relevant
information with greater comparability between financial periods.
The Group exercises judgement in assessing whether items should be classified
as adjusting items. This assessment covers the nature of the item, cause of
occurrence and scale of impact of that item on the reported performance. In
determining whether an item should be presented as adjusting items, the Group
considers items which are significant because of either their size or their
nature which management believe would distort an understanding of earnings if
not adjusted. In order for an item to be presented as an adjusting item, it
should typically meet at least one of the following criteria:
- Impairments of tangible and intangible assets, investments and
loan receivables not recoverable.
- Unusual in nature or outside the normal course of business
(for example the non-cash movement in the present value of put and call
options).
- Items directly incurred as a result of either an acquisition
or a divestment, or arising from a major business change or restructuring
programme.
The separate reporting of items, which are presented as adjusting items within
the relevant category in the Consolidated Income Statement, helps provide an
indication of the Group's trading performance in the normal course of
business. An explanation as to why individual items have been classified as
adjusting is given in Note 3 to the financial statements.
Furthermore, Alternative Performance Measures excluding adjusting items are
intended to enhance the comparability of information between reporting periods
and to help to provide an indication of the Group's trading performance.
Capital
Expenditure
Capital Expenditure is the measure of total cash invested each period to
maintain or build new retail fascias, logistics infrastructure, or technology
assets. This investment is in the ongoing business and is invested to deliver
growth in organic sales or improvements in gross profit or operating profit.
This APM is therefore useful to understand the investment the company is
making in its ongoing assets for which a return on investment is expected in
the future.
This measure excludes other items within net cash used in investing activities
in the cashflow statement as these are not related to investments in the
ongoing business, but to acquisitions, investments or disposals of
subsidiaries or joint ventures, proceeds of sale of non-current assets or
interest received.
The table below details the cashflow expenditure on capital investment as
detailed in the Consolidated Statement of Cash Flows.
2024 2023
(unaudited) (unaudited)
£m £m
Acquisition of intangibles (software development) 29.5 19.9
Acquisition of property, plant and equipment 500.0 326.6
Acquisition of other non-current assets 10.2 12.8
Total capital expenditure 539.7 359.3
Alternative Performance Measures
(continued)
Capital Expenditure
(continued)
An alternative presentation of this is as follows:
2024 2023
(unaudited) (unaudited)
£m £m
Investment in physical retail fascias 301.4 208.4
Investment in logistics infrastructure 153.2 85.8
Investment in technology and other 85.1 65.1
Total capital expenditure 539.7 359.3
Effective Tax Rate Before Adjusting Items
Being the adjusted tax charge as a percentage of the adjusted profit before
tax as outlined in the Consolidated Income Statement.
Restated((1))
2024 2023
(unaudited) (unaudited)
£m £m
Income tax expense 206.2 214.2
Profit before tax 811.2 486.7
Effective tax rate 25.4% 44.0%
Restated((1))
2024 2023
(unaudited) (unaudited)
Income tax expense before adjusting items 224.6 216.4
Profit before tax and adjusting items 917.2 991.4
Effective tax rate before adjusting items 24.5% 21.8%
(1) Please refer to Note 15 for further details of the
restatement.
Income Tax Expense Before Adjusting Items
Income tax expense before the impact of adjusting items as shown in the
Consolidated Income Statement and used in the Adjusted Effective Rate of
Taxation measure shown above.
Restated((1))
2024 2023
(unaudited) (unaudited)
£m £m
Income tax expense 206.2 214.2
Effect of adjusting items on income tax 18.4 2.2
Income tax expense before adjusting items 224.6 216.4
(1) Please refer to Note 15 for further details of the
restatement.
Like-For-Like Sales Growth
The definition of Like-For-Like ("LFL") sales growth is outlined in the
Organic Sales Growth definition below.
Alternative Performance Measures (continued)
Net Cashflow Before Dividends, Acquisitions and Disposals
Net cashflow before dividends, acquisitions and disposals is the movement in
cash and cash equivalents period on period excluding the impact of acquisition
of subsidiaries or non-controlling interests, cash proceeds from disposals,
purchase of equity investments, dividends paid to equity shareholders and
non-controlling interests.
This performance measure gives insight into the cash generated from the annual
operations of the business including capital expenditure reinvested in the
business, and excludes cashflows related to dividends and acquisitions and
disposals as these decisions are outside the normal course of business
operations.
Restated((1))
2024 2023
(unaudited) (unaudited)
£m £m
Profit before tax 811.2 486.7
Add back impairments of intangible assets and investments 39.2 137.2
Add back other non-cash adjusting items 69.2 367.5
Depreciation and amortisation of non-current assets 664.1 633.2
Change in working capital (197.0) (398.6)
Repayment of lease liabilities (400.0) (393.0)
Capital expenditure (539.7) (359.3)
Income taxes paid (208.6) (174.4)
Other (22.5) 15.0
Net cashflow before dividends, acquisitions and disposals 215.9 314.3
Acquisition of NCI and cash consideration of disposals (611.0) (21.6)
Equity dividends paid (50.1) (24.8)
Dividends paid to NCI in subsidiaries net of dividend received (2.1) 0.6
Change in cash and cash equivalents(2) (447.3) 268.5
Cash and cash equivalents at the beginning of the period(2) 1,548.9 1,280.4
Cash and cash equivalents at the end of the period(2) 1,101.6 1,548.9
(1) Please refer to Note 15 for further details of the
restatement.
(2) Cash and cash equivalents equates to the cash and cash
equivalents presented in the Consolidated Statement of Cash Flows, as
reconciled in Note 10.
Net Cash Before Lease Liabilities
Net cash before lease liabilities consists of cash and cash equivalents
together with other borrowings from bank loans and overdrafts but before lease
liabilities.
Net cash before lease liabilities is a measure of the Group's net indebtedness
that provides an indicator of the overall strength of the Consolidated
Statement of Financial Position. It is also a single measure that can be used
to assess the combined effect of the Group's cash position and its
indebtedness. Net cash before lease liabilities is considered to be an
alternative performance measure as it is not defined in IFRS. The most
directly comparable IFRS measure is the aggregate of borrowings and lease
liabilities (current and non-current) and cash and cash equivalents.
A reconciliation of these measures with net cash can be found in Note 10 to
the consolidated financial statements.
Restated((1))
2024 2023
(unaudited) (unaudited)
£m £m
Net debt (Note 10) (1,452.0) (914.7)
Lease liabilities 2,484.0 2,384.0
Net cash before lease liabilities 1,032.0 1,469.3
(1) Please refer to Note 15 for further details of the
restatement.
Net Financial Expense and Impairment Loss on Financial Assets Before Adjusting Items
Restated((1))
2024 2023
(unaudited) (unaudited)
£m £m
Net financial expenses (116.0) (319.3)
Adjusting items (in financial expenses) (5.5) 250.4
Adjusting items (impairment loss on financial assets) 58.8 -
Net financial expense and impairment loss on financial assets before adjusting (62.7) (68.9)
items
(1) Please refer to Note 15 for further details of the
restatement.
Alternative Performance Measures (continued)
Operating Costs Before Adjusting Items
Being operating costs before adjusting items included within operating costs.
Restated((1))
2024 2023
(unaudited) (unaudited)
£m £m
Selling and distribution expenses 3,622.7 3,353.5
Administrative expenses 536.2 751.6
Adjusting items (within administrative expenses) (52.7) (254.3)
Total operating costs before adjusting items 4,106.2 3,850.8
(1) Please refer to Note 15 for further details of the
restatement.
Operating Margin Before Adjusting Items
A reconciliation between operating margin and adjusting items can be found in the Summary Consolidated Income Statement On A 52 Week Basis on page 9.
Operating Profit Before Adjusting Items
A reconciliation is presented on page 60 between operating profit and operating profit before adjusting items by segment and sub-segment, including the impact of the unaudited 53rd week.
Organic Sales Growth
One of the key measures of performance is the growth in sales between reporting periods excluding the impact of currency, acquisitions and disposals. This is described by the Group as 'Organic Sales Growth'.
Organic Sales Growth is calculated at constant currency using the average
exchange rate of the current period applied to sales from the current and
prior periods. Organic Sales Growth is calculated by removing the impact of
all sales in the prior period from:
- Disposals undertaken in the prior period;
- Disposals undertaken in the current period; and
- Assets held-for-sale at the end of the current period.
In this context, 'disposals' refers to businesses divested by the Group, and
does not include individual store closures within continuing businesses. This
gives a new prior period base from which to calculate Organic Sales Growth
rates.
To calculate the Organic Sales Growth % in the current year, the new prior
period base is compared to the current period sales, adjusted as follows:
- Exclude any sales from businesses acquired in the current
period; and
- For acquisitions that were made in the prior period, exclude
sales in the equivalent pre-acquisition period in the current period
This isolates Organic Sales Growth to the percentage change in year-on-year
sales from businesses which were part of the Group in both the current and
prior periods.
Organic Sales Growth is further split into like-for-like ("LFL") sales, which
represent sales from stores of these businesses that existed in both periods,
and 'non like-for-like' sales ("non-LFL") which represents sales from new net
space, store relocations, and store conversions other than those that are part
of the strategic Finish Line to JD migration programme. This split enables the
performance of the retail stores to be measured on a consistent year-on-year
basis and is a common term used in the industry, albeit how it is calculated
can differ somewhat from company to company.
Additionally, in FY24 Organic Sales Growth is calculated on an unaudited
52-week basis vs. the prior period to aid comparability. The impact of the
53rd week has been analysed in the table below to allow comparison of the
unaudited 52-week period from the current and prior period.
Alternative Performance Measures (continued)
The table below shows a reconciliation of adjusted operating profit for the
unaudited 52 week period to 27 January 2024 to operating profit for the
reported 53 week period to 3 February 2024 by operating segment and
sub-segment.
Operating profit before adjusting Operating profit before adjusting Operating profit before adjusting items
items items Operating profit for the period
Adjusting items
52 weeks 53rd week 53 weeks 53 weeks 53 weeks
2024 2024 2024 2024 2024
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
£m £m £m £m £m
Sports Fashion (Reportable Segment)
Premium Retail Fascias
UK & ROI 340.4 3.0 343.4 (11.6) 331.8
Europe 69.3 (0.5) 68.8 - 68.8
Asia Pacific 69.2 1.1 70.3 - 70.3
North America 317.1 2.4 319.5 (2.2) 317.3
Other Retail Fascias
UK & ROI 51.8 - 51.8 (16.5) 35.3
Europe 52.8 (0.1) 52.7 30.8 83.5
Asia Pacific 0.3 - 0.3 (0.4) (0.1)
North America 31.7 0.3 32.0 - 32.0
Non-Retail Businesses 48.4 - 48.4 (43.0) 5.4
Total Sports Fashion 981.0 6.2 987.2 (42.9) 944.3
Outdoor (Reportable Segment)
Total Outdoor (7.1) (0.2) (7.3) (9.8) (17.1)
TOTAL GROUP 973.9 6.0 979.9 (52.7) 927.2
Operating profit before adjusting items
Operating profit for the period
Adjusting items
Restated ((1)) Restated ((1)) Restated (1)
52 weeks 52 weeks 52 weeks
2023 2023 2023
(unaudited) (unaudited) (unaudited)
£m £m £m
Sports Fashion (Reportable Segment)
Premium Retail Fascias
UK & ROI 369.5 (9.1) 360.4
Europe 102.2 - 102.2
Asia Pacific 66.6 (8.1) 58.5
North America 340.2 (7.1) 333.1
Other Retail Fascias
UK & ROI 23.2 (133.5) (110.3)
Europe 67.2 (24.7) 42.5
Asia Pacific 0.2 - 0.2
North America 44.8 - 44.8
Non-Retail Businesses 30.0 (32.0) (2.0)
Total Sports Fashion 1,043.9 (214.5) 829.4
Outdoor (Reportable Segment)
Total Outdoor 16.4 (39.8) (23.4)
TOTAL GROUP 1,060.3 (254.3) 806.0
(1) Please refer to Note 15 for further details of the
restatement.
Alternative Performance Measures
(continued)
The table below shows a reconciliation of
organic Sales Growth for each operating segment and sub-segment for the
unaudited 52 week period ended 27 January 2024 and reconciled to the 53 week
period ended 3 February 2024. The analysis is split over two tables.
Pre-disposal revenue of disposals
Revenue Impact of retranslating at Impact of 2023 Revenue rebased Organic sales
2023 and 2024 Acquisitions growth 52 weeks
2024 rates disposals 2023 2024 2024 2024 2024
£m £m £m £m £m £m £m £m
Sports Fashion
(Reportable Segment)
Premium Retail Fascias
UK & ROI 2,597.6 2.6 - 2,600.2 - - 60.8 2,661.0
Europe 1,385.8 18.3 - 1,404.1 - - 355.6 1,759.7
Asia Pacific 430.9 (22.5) (31.9) 376.5 - 13.2 92.0 481.7
North America 2,845.6 (48.8) - 2,796.8 - - 272.2 3,069.0
Total Premium Retail Fascias 7,259.9 (50.4) (31.9) 7,177.6 - 13.2 780.6 7,971.4
Other Retail Fascias
UK & ROI 520.4 - (499.7) 20.7 - 85.5 (0.8) 105.4
Europe 1,179.7 32.0 (92.8) 1,118.9 - 64.2 52.7 1,235.8
Asia Pacific 2.2 (0.1) (2.0) 0.1 - 1.6 - 1.7
North America 280.7 (4.7) - 276.0 - - 6.5 282.5
Non-Retail Businesses 317.8 (0.4) (215.6) 101.8 7.6 132.1 6.5 248.0
Total Sports Fashion 9,560.7 (23.6) (842.0) 8,695.1 7.6 296.6 845.5 9,844.8
Outdoor
(Reportable Segment)
Total Outdoor 564.3 - - 564.3 - - (11.9) 552.4
TOTAL GROUP 10,125.0 (23.6) (842.0) 9,259.4 7.6 296.6 833.6 10,397.2
52 Weeks Week 53 53 weeks LFL Non-LFL Organic sales
2024 2024 2024 2024 2024 LFL Non-LFL growth
Continued £m £m £m £m £m % % %
Sports Fashion
(Reportable Segment)
Premium Retail Fascias
UK & ROI 2,661.0 30.9 2,691.9 13.5 47.3 +0.5% +1.8% +2.3%
Europe 1,759.7 27.9 1,787.6 147.8 207.8 +10.5% +14.8% +25.3%
Asia Pacific 481.7 9.4 491.1 46.9 45.1 +12.5% +12.0% +24.4%
North America 3,069.0 45.6 3,114.6 108.1 164.1 +3.9% +5.9% +9.7%
Total Premium Retail Fascias 7,971.4 113.8 8,085.2 316.3 464.3 +4.4% +6.5% +10.9%
Other Retail Fascias
UK & ROI 105.4 0.9 106.3 4.2 (5.0) +20.3% -24.2% -3.9%
Europe 1,235.8 19.4 1,255.2 38.6 14.1 +3.4% +1.3% +4.7%
Asia Pacific 1.7 - 1.7 - - - - -
North America 282.5 3.5 286.0 7.8 (1.3) +2.8% -0.4% +2.4%
Non-Retail Businesses 248.0 - 248.0 (2.4) 8.9 -2.4% +8.7% +6.4%
Total Sports Fashion 9,844.8 137.6 9,982.4 364.5 481.0 +4.2% +19.9% +9.7%
Outdoor
(Reportable Segment)
Total Outdoor 552.4 7.2 559.6 (14.7) 2.9 -2.6% +0.5% -2.1%
TOTAL GROUP 10,397.2 144.8 10,542.0 349.8 483.9 +3.8% +5.2% +9.0%
Alternative Performance Measures
(continued)
Sales Growth From Net New Space
The definition of sales growth from net new space is outlined in the Organic
Sales Growth definition above.
Sales Growth
One of the key measures of performance is the growth in sales between
reporting periods excluding the impact of currency. The figures below are
extracted from the Organic Sales Growth table.
Sales Growth
£m
Revenue 52 weeks 2023 10,125.0
Impact of retranslating at 2024 currency rate (23.4)
10,101.6
Revenue 52 weeks 2024 10,397.4
Sales Growth 2.9%
Summary Consolidated Income Statement On A 52 Week Basis
In order to provide comparability with the prior year results for the 52 weeks
ended 28 January 2023, the tables below present a summary of the Group's
Consolidated Income Statement for the 53 week period to 3 February 2024,
adjusted to remove the results of week 53, providing an unaudited 52 weeks
period to 27 January 2024. In determining the week 53 adjustment, revenue and
gross profit represents the actual trading performance in that week, with
operating costs and net financial expenses allocated on a reasonable basis to
reflect an estimate of costs for that week, unless a split was not deemed to
sufficiently represent the actual costs incurred during week 53.
Exclude 53rd Restated((1)) 52 weeks
53 weeks week 2024 52 weeks (unaudited)
2024 (unaudited) 2023 Change
2024
£m £m £m £m %
Revenue 10,542.0 (144.8) 10,397.2 10,125.0 +2.7
Gross profit 5,048.0 (61.7) 4,986.3 4,877.6 +2.2
Gross profit margin 47.9% 42.6% 48.0% 48.2%
Operating costs before adjusting items (4,068.1) 55.7 (4,012.4) (3,817.3) +5.1
Operating profit before adjusting items 979.9 (6.0) 973.9 1,060.3 -8.1
Operating margin before adjusting items 9.3% 9.4% 10.5%
Net financial expense before adjusting items (62.7) 1.2 (61.5) (68.9) -10.7
Profit before tax and adjusting items 917.2 (4.8) 912.4 991.4 -8.0
Adjusting items (106.0) - (106.0) (504.7) -79.0
Profit before tax 811.2 (4.8) 806.4 486.7 +65.7
(1) Please refer to Note 15 for further details of the
restatement.
The table below shows the reconciliation of operating costs between 52 weeks
and 53 weeks as well as, the reconciliation between operating costs before
adjusting items and operating costs.
Exclude 53rd Restated((1)) 52 weeks
53 weeks week 2024 52 weeks (unaudited)
2024 (unaudited) 2023
2024
£m £m £m £m
Selling and distribution expenses (3,622.7) 49.6 (3,573.1) (3,353.5)
Administrative expenses before adjusting items (483.5) 6.6 (476.9) (497.3)
Share of equity accounted investees 7.6 (0.1) 7.5 4.9
Other operating income 30.5 (0.4) 30.1 28.6
Operating costs before adjusting items (4,068.1) 55.7 (4,012.4) (3,817.3)
Adjusting items within administrative expenses (52.7) - (52.7) (253.4)
Operating costs (4,120.8) 55.7 (4,065.1) (4,070.7)
(1) Please refer to Note 15 for further details of the
restatement.
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