While British peers like Sainsbury’s, Marks & Spencer and, most recently, Tesco, made a big splash about arriving in the U.S. – only to leave with their tails between their legs and considerably poorer – JD Sports expansion has sneakered up on the North American market.

JD Sports reported that key product lines were affected by Houthi attacks off Yemen, which had delayed or rerouted shipping channels. The impact of the chilly and wet weather also extended to the group’s main JD sportswear chain, where sales at established stores were down 4.6 percent in what the group described as a “challenging and often volatile U.K. market.”

JD Sports on a Sprint

JD Sports is a British sports footwear and apparel brand that, if not exactly a secret success, has become a major player in the U.S. without fanfare and by playing smart in the ultra-competitive athleisure market. This year it made its biggest move yet with a billion-plus dollar deal to buy Hibbett, the Birmingham, Alabama chain that JD Sports believes will help strengthen its growing position in the world’s biggest sportswear market.

To do so, JD Sports parted company with $1.1 billion – using $300 million in cash and a $1 billion extension to its existing banking facilities – to pick up sports fashion retailer Hibbett in a move designed to bolster its growth in America’s southeast. It gained 1,169 stores in 36 states and leading brands including Hibbett and City Gear. Last year Hibbett delivered a healthy pre-tax profit of $131.6 million on sales of $1.7 billion.

International Sales Boost

The combined revenues of JD Sports and Hibbett in the U.S. now amount to nearly $6.1 billion, meaning that North America accounts for about 40 percent of the entire group’s sales, up from 32 percent previously. On top of that, JD Sports also owns Sprinter in Europe and Finish Line, Shoe Palace and DTLR in the U.S. after first entering the American market back in 2018 with its $558 million takeover of Finish Line. That gave JD Sports its first foot in the door and cleverly – and unusually – the retailer kept hold of Finish Line’s management and leaned in on their expertise in the U.S. market before making any dramatic changes.

JD Sports was happy to limit itself to store tweaks, gradually introducing its own merchandise mix into Finish Line and figuring out what worked and what failed to land before attempting any full store conversions. Following the takeover, it has expanded its stores in the U.S. across Finish Line, Shoe Palace and DTLR, acquiring the latter brands in December 2020 and March 2021 respectively.

Since then, JD Sports has doubled down on that U.S. expansion, which is slated to play a key part in its strategy over the next decade. The stakes have risen since the latest acquisition, because sales in the U.S. and the rest of the world could soon account for over half of total global sales.

Hibbett: A Strategic Milestone

JD Sports has described the deal to take over Hibbett as an important strategic milestone for the group, accelerating its growth plans in North America and aligning with the group’s stated goal of enhancing its presence in the “world’s biggest and most attractive sportswear market.”

Régis Schultz, the laser-focused CEO of JD Sports said: “Strategically, it enhances our presence within North America and achieves our objective of strengthening our ‘Complementary Concepts’ division. Hibbett’s footprint is highly complementary, adding a stronger presence in communities across the southeastern U.S., where we currently have a limited presence. It will also provide a stronger platform for the rollout of the JD fascia in the U.S.

“Financially, it accelerates our growth plans within the U.S. and is expected to be earnings accretive from year one before potential synergies are taken into account. It will also further strengthen our key brand partner relationships in the largest sportswear market in the world. Hibbett has a strong and experienced management team who we look forward to working with on this transaction and beyond.”

Dampened U.K. Sales

The success of the acquisition is especially critical after the most recent domestic results for JD Sports. Its U.K. business has been hit by falling sales this year after supply chain disruption in the Red Sea stalled deliveries and, like any retailer worth its salt, they blamed the weather for soggy results. Britain’s cold, wet spring canned demand for camping gear and outdoor apparel and the retail group, which also owns outdoor wear and equipment retail chains Millets, Go Outdoors and Blacks with a combined 243 stores, saw sales in this sector down 5.3 percent in the six months to August 3.

JD’s poor U.K. performance was offset by strong sales growth in Europe and the U.S. Group sales rose 5.2 percent to almost $6.5 billion and half-year, pre-tax profit was down 64 percent to $163.9 million, including one-off costs such as the closure of a distribution center and the acquisition of Hibbett. The group said it still expected to hit profit expectations of between $1.29 billion and $1.3 billion for the full year.

As an aside, in late October JD Sports sold its majority stake in a company founded by former British Olympic swimmers Steve Parry, Rebecca Adlington and Adrian Turner. Through its subsidiary JD Gyms, JD Sports held a 60 percent stake in the Bolton-based Total Swimming Group since 2022.

JD Sports reported that key product lines had been affected by Houthi attacks off Yemen, which had delayed or rerouted shipping channels, while the impact of the chilly and wet weather also extended to the group’s main JD sportswear chain, where sales at established stores were down 4.6 percent in what the group described as a “challenging and often volatile U.K. market.”

There was one ray of domestic sunshine. The England national soccer team reached the finals of the summer European Championships played out in Germany, boosting replica soccer uniforms beyond expectations.

Positive Trends

Despite domestic setbacks, JD Sports Chief Executive Régis Schultz insisted that he remained confident about the wider sportswear and athleisure market and JD’s ability to outperform because of its multi-brand, international mix. He pointed to positive casual wear trends and increasingly active lifestyles. Vintage running gear is expected to be a big trend in the holiday season including the revival of the Adidas Gazelle and Samba shoes. The Samba is now the group’s bestselling womenswear shoe in the U.S. and Adidas maintains a strong performance across the Atlantic, where sales at established stores rose by nearly 6 percent.

Schultz has made much of JD Sports’ strong relationships with the major manufacturers and said that he was looking forward to working with Nike’s new chief executive Elliott Hill, adding: “We see Nike coming back. Nike will be fine. Nike is a strong brand.”

But Schultz also conceded that JD Sports is planning on a high level of discounting in the sports apparel and footwear market up until Christmas, as it looks to clear stock after the poor summer and copes with a shift away from non-essentials during the ongoing cost of living squeeze. While probably best known for its sneaker styles, sports clothing makes up a major part of its mix and 2024 has not been kind to apparel sales.

U.S. Tops JD Sports Priorities

There is little doubt about where JD Sports’ priorities lie in the years ahead. Having made a success of its first two North American acquisitions, the evidence points to a slow evolution of its offer with Hibbett. The company has made no secret of its desire to be a major player in the U.S. and buying Hibbett pretty much doubles its store footprint and strengthens its presence in an important region of the States. Boss Schultz doesn’t lack in confidence and JD Sports, unlike many of its U.K. peers, and he suggests it can keep pace with the U.S. athleisure and equipment giants and become a major player in the number one sportswear market.