On JD Sports Fashion’s analyst call for its first-half results, CEO Régis Schultz said the UK-based chain is “not waiting” for Nike to recover and is aggressively shifting orders to performance running, hotter brands such as On and Salomon, and newer non-sneaker styles that are “gaining momentum.”

In the Q&A section of the call, an analyst asked whether JD Sports was “taking more significant action on backing brands that currently have momentum versus waiting for a turnaround” at Nike, its largest brand.

Schultz responded by saying, “We are not waiting for anything” and implied the brand has long followed the trends. Said Schultz, “We have full flexibility, and I think our assortment is moving linked to the trends and nothing else than the trends, and the appetite for our customer for different products.”

He noted that JD has already been chasing On product, having had an exclusive on On within its channel for three years until it expired last year. He elaborated, “As I always say, we are selling to our customer what they want to buy, and if they want to buy Nike, we propose Nike. If they want to buy On, if they want to buy Asics…Our merchandising is fully flexible.”

He further noted that its market share in key regions with “some of the new brands” is higher than with Nike. Schultz added, “All of that shows that we are not waiting for anything, and we’re just acting and moving our range with the trends and with our customer taste.”

Nonetheless, Dominic Platt, JD’s CFO, in an interview with Reuters Wednesday said JD remains optimistic on Nike’s recovery prospects.

 “Much as there’s a lot of talk about Nike, it’s still the most popular brand ⁠out there and it’s still a very strong brand,” Platt told Reuters. “We think they’re doing ⁠absolutely the right things,” he said.

Platt added, “What we do see is their performance ranges are ⁠coming through well – brands like Vomero, Pegasus are resonating well with customers, so it really is just ⁠a matter of time…This is a big business, and big businesses don’t turn round in six months.”

On August 20, JD reduced its full-year profit guidance due to a slower quarter for high-heat footwear product, a later “back-to-school” selling season and a “highly promotional” footwear marketplace. The footwear weakness was most prevalent in North America.

In the first half ended August 1, JD Sports’ total sales reached £5.9 billion ($7.9 bn), marking a decline of 0.8 percent year-over-year (y/y) at constant FX rates and a decline of 0.7 percent at reported rates.

Profit before tax and adjusting items was £282 million against £351 million a year ago, a decline of 18.7 percent at constant FX rates and 19.7 percent at reported rates, reflecting promotional pressures.

“We delivered a resilient sales performance in the first half against a backdrop that was challenging for our industry and for our customer,” said Schultz on the call. “Youth unemployment and cost of living pressure both increased, while the footwear product cycle continued to evolve in a highly promotional market.”

Category Performance
Footwear’s sales declined 3 percent year over year (y/y) at constant FX rates, making up 60 percent of sales in the half against 62 percent a year ago.

Platt said on the call, “Throughout the half, we continue to see a significant shift in the global footwear product cycle, given the transition between newer but smaller in value franchises and larger end-of-cycle product lines. We saw strong growth across brands less affected by this transition, and particularly with performance-based running silhouettes and newer footwear styles.”

Schultz said, “In footwear, performance running and newer non-sneaker styles are gaining momentum.”

He wasn’t sure how strong the shift toward non-sneaker categories were. Schultz said, “While relatively small today in our mix, Mary Jane, ballet flats, ballerina, loafer, and brands like Birkenstock, Ugg, and Havaianas are supporting continued growth in the other category. The question we ask ourselves, ‘Is the future of sneaker a revision of a formal shoe?’ Whatever is the future, we will win with a winner.”

In running, he said JD now has two subcategories, retro running and new running with On, Hoka, Salomon, Vomero, “all growing very fast” and overall performance running momentum appearing healthy. He added, “Running clubs and gyms are becoming the new nightclubs. Health, fitness, and wellbeing are increasingly a priority for our core customers.”

He said the customer trend within the running category is helping offset year-on-year mix decline in retro basketball and retro global football (soccer) category.

In the Q&A section of the call, Schultz said JD doesn’t see “something dramatically changing” within the footwear cycle.

He noted that it takes time to scale franchises, pointing out taht it took the Salomon XT-6 four years to scale to become one of JD’S top-10 sellers.

Schultz said, “So it takes time, and I think you need to not forget, if you scale a franchise too quickly, you kill it right away.  Whoever you are, customers need time to build franchises. I think XT-6 is, for me, the best example.  It’s a key franchise. It’s now part of our top-10, and it’s working everywhere, but it has taken four years to build that to what is today a significant shoe. It will not be right for any brands to believe that you can do it in one year,”

He further said he’s not sure when the marketplace will stop being promotional because he believes retailers are still overbuying athletic footwear. Schultz noted that JD said two years ago that athletic is a “maturing market,” with the category having reached about 55 percent of purchases. He believes the days of consistent “double digit growth” in the category are over. Schultz said, “I think that as soon as everyone recognizes that, they will stop to buy for a market that doesn’t exist, and that means that you will not have excess stock. That’s as simple as that. So, we are in that place, and you have seen how disciplined we are in our buy.”

Apparel’s sales in the half were up 4 percent at constant FX rates y/y in the half, increasing to 36 percent of the mix from 35 percent the prior year.

Schultz said performance and street fashion “continue to be the standout categories” in apparel.

He added, “In the U.S., our growth in apparel is fueled by street fashion and our own brands and licensed brands. They represent around 15 percent of apparel sales and allow us to respond quickly to new trends and offer competing price points. They also provide structural margin benefits. With products unavailable elsewhere, we have greater control over pricing and are less exposed to the promotional dynamics that affect the broader market.”

JD said apparel remains “significantly” below JD’s overall apparel penetration of 36 percent in North America and it remains a sizeable growth opportunity in the region. Schultz said, “We are broadening the assortment across athletic leisure, streetwear, and performance. More brands, more style, and more trends, all carefully curated for the JD customer.”

In its remaining category, Other (includes outdoor living equipment and JD Gyms memberships), sales expanded 2 percent y/y at constant FX rates, increasing to 4 percent of sales in the half from 3 percent last year.

Regional PerformanceIn North America (representing 33 percent of sales), organic sales were down 1.7 percent, and comps declined 4 percent.

“In Q1, trading was supported by key consumer moments, including the U.S. tax refund season and product launches. Performance softened as Q2 progressed, reflecting weaker consumer sentiment due to incremental cost of living pressures, a slower quarter for high heat footwear product, and the deferral of back-to-school demand into August,” said Platt.

Organic footwear sales were down 5 percent on a constant-currency basis y/y. JD said the footwear decline in the region “reflected ongoing softness in end-of-cycle product lines and a slower environment for high-heat product in Q2, alongside tougher comparatives; this was partially offset by continued momentum in the performance-based running category and newer footwear styles.” Apparel and accessories sales were up 2 percent on a constant-currency basis, with strength in women’s ranges and owned brands.

He said JD banner delivered “a more resilient performance versus our complementary businesses,” in North America with same-store decline of 1.1 percent, supported by a “relatively more diverse product proposition.” Its other North American banners include DTLR, Shoe Palace, Hibbett, and Finish Line.

Operating margin in the North America region was 220 basis points lower year-on-year, largely due to deleverage impacts and the ongoing wind-down of the standalone Finish Line business.

Platt said the Finish Line was the primary source of promotionality among banners in the region. However, targeted price investments were also made across banners, “particularly in Q2, in order to stay engaged with consumer dynamics,” said Platt.

The lower operating margin in North America was also partly driven by investment to strengthen the brand positioning of the JD banner in North America. This was partially offset by ongoing operational and back-office efficiency measures across procurement, technology, and supply chain and logistics.

Overall, North America delivered organic comparable sales decline of 3.5 percent. Excluding the standalone Finish Line business, North America comparable sales were 2.5 percent.

In its financial statements, JD  said revenue at JD North America, which includes the JD banner in North America and the Finish Line stores being converted, fell 1.2 percent to £1,115 million on a reported basis and increased +0.6 percent at constant FX rates.

JD said of JD North America, “Net new space growth was +4.0 percent as we continue to manage the conversion of the Finish Line fascia to JD to plan and build strong brand awareness of the JD fascia in key markets. LFL sales declined -3.4 percent reflecting weaker core customer sentiment amidst a broader cost-of-living backdrop, particularly in key lifestyle footwear brands, resulting in an elevated promotional marketplace. Our online business has performed well with an expanded assortment, and our apparel and accessories proposition performed strongly, especially in women’s and our own-brand proposition that has resonated well with our customers and reflects our agility in responding to emerging trends and complementing sports brands.

“Operating profit before adjusting items and after lease interest* was down 51 percent, driven primarily by the expansion of the store estate alongside indexed increases in wages and rents, and focused digital marketing investment supporting the increased participation of the online business, which has now increased to 24 percent (HY26: 21 percent) of sales. Gross margin was robust reflecting controlled price investments.”

JD said revenue in Community (Hibbett) and City Speciality (Shoe Palace, DTLR and City Gear) fascias, decreased 3.9 percent at constant FX rates to £1.12 billion. JD said, “Net new space growth of +0.7 percent reflected ongoing City Gear conversions. LFL sales decline of 4.6 percent was skewed to Q2 (-8.4 percent) as footwear performance reflected slower high-heat product, alongside tougher comparatives (due to the shift in the product launch schedule from Q1 to Q2 in the prior year), and intensifying cost-of-living pressures. Q1 LFL sales decline was -1.1 percent.”

Europe (representing 33 percent of sales) delivered organic sales decline of 0.5 percent and comparable sales decline of 2.6 percent, supported by good growth across its sporting goods businesses.

JD said, “Q1 saw weather disruption in Southern Europe and volatile trading through April, partially offset by stronger in-store conversion and online sales. Trading in Q2 continued to reflect a challenging consumer backdrop, with resilient performances across our Sporting Goods businesses in Iberia, Greece and Cyprus providing support to the regional trend. Footwear reflected ongoing softness in end-of-cycle product lines, partially offset by event-driven demand and sales of performance-based running and seasonal fashion lines; organic footwear sales were c.-2 percent y/y. Apparel and accessories delivered a good performance, supported by a strong product offer and growth in own brands, with organic sales growth of c.+7 percent.”

Europe’s operating margin was flat year-on-year, with labor cost inflation and costs related to new space offset by cost efficiencies across retail, online, and supply chain operations, including the benefit of ramping automation within its Heerlen distribution center in the Netherlands and the unwind of the associated double running technology and supply chain costs.

In the UK (representing 24 percent of sales), organic sales were down 1.6 percent for the half, with comparable sales up 0.3 percent.

JD said of the UK, “Q1 was impacted by wet weather conditions and lower footfall, though store performance was supported by good in-store conversion throughout the half. Footwear performance remained challenged, reflecting softness in end-of-cycle product lines and a promotional market, partially offset by sales of performance-based running and seasonal fashion lines; organic footwear sales were c.-6 percent y/y. Apparel and accessories benefited from strong sales of football replica kit in Q2, with continued momentum in own brands and women’s product ranges; organic apparel and accessories sales were c.+1 percent y/y.”

The U.K. operating margin was 130 basis points lower year-on-year, largely due to targeted price investments and operating cost deleverage impacts.

Asia Pacific, representing 5 percent of Group sales, delivered organic sales growth of 10.7 percent and comparable sales of  positive 3.0 percent. JD said, “The region maintained positive sales momentum despite tougher comparatives in Q2, supported by the successful roll-out of a new e-commerce platform in South-East Asia in FY26.” Operating margin was 90 basis points lower, largely driven by new store openings.

Guidance
JD reiterated its guidance for the year provided that was downwardly updated on August 20.

JD said in its financial statements, “HY27 has been a tough half, reflecting many of the near-term headwinds we identified at the time of our FY26 full year results. Ongoing geopolitical and macroeconomic volatility continues to drive a more challenging consumer backdrop. We saw this particularly in the second quarter, with elevated consumer cost-of-living pressures persisting, alongside a slower environment for high-heat footwear product against a highly promotional market backdrop. In this environment we delivered a resilient HY performance, reflecting the strength of our operating model and our focus on operational discipline demonstrated in our strong strategic progress, encouraging apparel and online sales performance, and our ongoing cost and capital discipline. We continue to believe that the markets in which we operate are positioned for average annual medium-term growth of 2-3 percent. In the near term, however, a number of the headwinds seen in HY27 may persist into H2: a weaker spending environment for our core customer demographic, ongoing product cycle evolution in footwear at some of our major brand partners, and a promotional market backdrop.

“As announced at our Q2 trading statement and reiterated today, we anticipate profit before tax and adjusting items of £700m to £800m in FY27. Our free cash flow guidance of £460m to £520m is unchanged, underpinned by our ongoing cost and capital discipline.

“Consistent with our ‘controlling the controllables’ approach, in H2 we are focused on:

  • Continuing to invest in our customer proposition – through marketing, ranging, digital, AI deployment, and data and loyalty – to drive sales momentum and sharpen execution.
  • Driving further store footprint productivity across all fascias, including the continued conversion of Finish Line stores to JD in the US, our ‘fewer, bigger, better’ strategy in the UK, and the restructuring of our European store portfolio.
  • Maintaining our core trading discipline while managing pricing competitively in line with evolving market conditions.
  • Sustaining our sharp focus on cost efficiency and productivity, aiming to significantly offset underlying LFL opex increases.
  • Continuing to generate significant free cash flow, supported by disciplined capex and strong working capital management.

“Taken together, these actions ensure we remain well placed to outperform through the cycle, leveraging our strengthened operating model, globally diversified footprint and multi-brand agility.”

With 4,766 stores across 35 countries, JD’s banners include JD, Size?, Courir, DTLR, Shoe Palace, Hibbett, Sprinter, Sport Zone, Cosmos and Go Outdoors. JD also operates 104 JD Gyms sites in the UK, and 83 franchised stores in a further 15 countries

Image courtesy JD Sports