Unaudited FY24 Results

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

¹Explanations 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:

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

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. Euromonitor¹ 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 growth¹ 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%.

Region² - 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%.

Channel² - 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.

Category² - 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.

¹Source: Euromonitor International Limited, Apparel & Footwear 2024 edition, retail value RSP incl sales tax, US$, year on year exchange rate, current terms

²The 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 growth³, double-digit operating margin³ and double-digit market shares in our key markets over the course of the plan. In respect of our target for double-digit sales growth³, 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 margin³ 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.

³Sales 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.

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. 

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.

¹From 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

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.

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.

¹A 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.

¹Please 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

A performance summary of the different sub-segments in the Group can be seen in the table below.

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.    

¹Cash 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.

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. 

·      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: -

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.

 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.

 ¹JD, 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'.

²JD, Size? and Foot Patrol fascias in Europe inc. Republic of Ireland which were previously presented as 'Premium: Europe' within Sports Fashion.

³JD fascia in the Asia Pacific region which was previously presented as 'Premium: Asia Pacific' within Sports Fashion.

⁴JD, 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'.

⁵JD Gyms and Swim! which were included previously as part of 'Other Businesses' within Sports Fashion.

⁶Those 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.

⁷DTLR 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.

⁸Those 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.

⁹Those 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.

¹⁰The aggregation of the businesses which were presented previously as the Outdoor reportable segment.

¹¹Principally, 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

Year to 3 February 2024

52 Weeks to 27 January 2024*

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

   (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

    (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

(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

(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

(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: