JD Sports Leaves Ashley Trailing With ‘Astonishing’ Growth

  • U.K. sports retailer reports 66% profit gain as rival lags
  • Customers attracted to exclusive ranges from Adidas, Nike

An employee stacks Lacoste SA polo-shirts, manufactured by Lacoste SA, at a JD Sports Fashion Plc sportswear retail store on Oxford Street in London.

Photographer: Luke MacGregor/Bloomberg

JD Sports Fashion Plc reported first-half earnings growth that showed why it has surged past Mike Ashley’s Sports Direct International Plc among U.K. athletic-gear retailers.

Underlying pretax profit jumped 66 percent to 77.4 million pounds ($103 million), the Bury, England-based company said Tuesday, an outcome described as “astonishing” by independent retail analyst Nick Bubb. The shares rose as much as 8.3 percent to a record.

While still smaller than Sports Direct in sales, JD Sports has sprinted past its larger rival in market capitalization, now being valued at 2.8 billion pounds compared with its competitor’s 1.9 billion pounds. By stocking exclusive ranges from Adidas AG and Nike Inc. in bright, spacious outlets, JD has attracted a new breed of fashion-savvy customers as Sports Direct’s stack-it-high, sell-it-cheap strategy has fallen out of favor.

JD Sports “is clearly differentiated” from Sports Direct, Cantor Fitzgerald analyst Freddie George said. In addition to having the support of Adidas and Nike, the retailer “has significant potential to be developed overseas, where it now has momentum.”

The first-half profit boost was based on same-store sales growth of 10 percent in the company’s main sports-retail business. It also has an unprofitable camping unit that includes the Blacks and Millets chains.

While still predominantly a U.K. business, JD is making strides across Europe and beyond. It acquired 12 stores in Portugal in July and is due to open outlets in Brussels and Cologne, Germany, in the second half of the year. It is also refurbishing a shop in Amsterdam, and has acquired stores in Malaysia and Australia.

Business in the second half has been of a “positive nature,” Chairman Peter Cowgill said in a statement.

The shares were up 5.1 percent at 1,401 pence at 9:30 a.m. in London, after earlier touching an all-time high of 1,443 pence.

JD’s growth is in stark contrast to Sports Direct, which has seen sales and profit slump amid investor discontent over working practices and corporate governance. Sports Direct said last week that earnings would miss estimates, the third blow to profit expectations this year, leading Ashley to say that the company’s selling strategy is no longer acceptable.

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