Jd Sports Fashion Plc New

Good morning, everyone, and welcome to the JD interim results. I do feel slightly overdressed here this morning. I must remember to give a call and work out what the dress code is next time. It's been an incredibly busy first half, and I have to tell you that the pace at JD is quite extraordinary. As chairman, of course, I stand above this, and my pace is a bit less, but it's interesting to see. We've continued to make really great progress on the plans that were outlined at the Capital Markets Day. And it is hard to think that the Capital Markets Day was only in February this year. So the pace that we've been going at since is extraordinary. We've continued to build the infrastructure within the business, and the foundations have been further strengthened, I think. Ray Gies has continued to build out his top team with a new CFO, new CTO. We've got a new group legal counsel. The governance program we've got in place has been forging ahead. Pete might be able to talk to you a little about that. He's been very central to that. We've added three new NEDs to the board to add some deep PLC experience to a very good board. And we've continued with things like disposing of the fashion brands. We've announced our plan to acquire the minority interests in Iberia, Germany, and Central Europe. And, you know, subject to competition clearance, we've announced the acquisition of Courier in France. So, I mean, in terms of things we've got on the tick list for the last six months, it's certainly been a very, very busy time. And I commend the management for their incredible efforts. I think we've also watched with interest how the stock has been buffeted a bit by results at other retailers. We've seen the concerns that have come from the performance of people like Foot Locker and Dick's and so on in the US. And I kind of remember this at Tesco, where JS results always used to sort of have an impact on Tesco. Yet over time, the Tesco business became double the size of Sainsbury's here in the UK alone, let alone all the other things we were doing with International. And while certain market conditions affect everyone, we were also on our own path in a way. We were also shaping our own destiny. And I hope over time that JD will start to be seen in that way. As the sheer number of opportunities we're pursuing, the growth aspirations we laid down in that capital markets day become more tangible. We are in and of the market, of course. But we're also on our own path. And that's important, I think, to remember. Anyway, I'll hand over to Regis now, who will take you through the numbers. I do want to thank him, and thank you, Regis, and the team, for the extraordinary efforts in this first half. And I'll let him take you through now some of the numbers that underpin that.

Yes. Thank you very much, Andy. Thank you for your kind words. Can you hear me? Is it okay? Yeah. So good morning to everyone here in the room and for the one who are watching us on the webcast. And thank you for attending our interim result presentation today. Today I will do a double act. I will do the financial and the strategy updates. Dominic is joining us on the 4th of October. So not long time, but he's joining us on the 4th of October, taking over from Neil. And despite Andy have been a CFO not long time ago, two or three years ago. And me, the same. I've been a CFO too, but we feel more comfortable to have Pete Fox with us to answer your tricky and picky question at the end of the presentation. So let's go to the presentation and share with you the numbers. So in the first half, I think you have seen that we have delivered on our strategy and our triple-double objective. As you remember, we say double-digit growth. We are delivering 12% organic growth. Double digit market share. We are gaining share in every market we operate, including UK, which is our more mature market. And double digit profit. And as you have seen, we are on track to deliver more than one billion profit for the full year in line with our guidance. We have done particularly well in North America, and we had over-scrutinity around North America, but we have done particularly well. I think the numbers is telling. Premium organic sales has been growing by 15%, and our profit grew by 12%, which I think it's a first-class performance. As we said, we are delivering the full-year profit before tax and adjusted item guidance of 35% in the first half of the $1.4 billion that we want to deliver for the full year. This is down $10 million compared to last year. But as you remember, we are going back to the normal first half, second half split. And last year, the first half, our margin rate was artificially high because of the fact that we had no clearance and no stock in the market at the end of the quarter. We are on track to open more than 200 new JD stores worldwide, in line with our plan. We opened 83 stores in the first half. And finally, we have a strong balance sheet. We have a strong cash position with 1.3 billion of net cash on our balance sheet, which gives us the ability to increase our dividend to go back to the cover that we had before the pandemic. So the next slide gives you a more detailed understanding of our growth by region. So this is our total business growth. So you can see that, and you have the total growth, 8%. This includes the investments that we have done at the end of last year, which we have a very small exchange rate impact, which means that we're going from 8% to 7%. And in terms of currency, you have a 12% organic growth. So the difference between organic growth and like-for-like is a new space that we had in the market, relocation and soil expansion. This is 4% for the first half. This will increase in the second half because we opened a lot of stores in the first half and even more stores in the second half. As you can see, from both like-for-like and organic perspective, the sales growth have been good in all regions. So if you look at APAC is leading the way with a 24% growth in terms of organic, 15% in terms of like-for-like, followed by Europe, and Europe is already a big business, and this business is growing very fast with a double-double, 19% growth in terms of organic, 12% in terms of like-for-like. North America, almost the same as Europe, plus 14% organic, plus 8% like-for-like. And in UK, this is our total UK, as you will see, for JD we do better than that, but it's a plus 5% and plus 4% like-for-like. If you go to our P&L, and I think we can look at our P&L in more details, revenue line, $4.8 billion for the first half. And just to echo what Andy was saying, $4.8 billion, this is more than our total year 2018 turnover. So it's not a long time ago. That was five years ago. That was our full year turnover. This is now our first half turnover. It gives you a magnitude of the growth that we have delivered. we want to deliver for the future. Margin, 48%, last year was 48.5. I think if you want to compare like for like, we should say 48.8, because there is 30 basis points which is linked to the fact that we reclass the delivery income part of revenue versus part of netting the cost. So there is 80 points below last year, which is completely in line with our expectation, and the fact that last year we had no clearance at the end, we had no stock, especially in the US. So we are very comfortable for 48%. 48% is 1.5 point, one point more than pre-pandemic level of margin for the first half. And if you look at our history, we always have a better margin in second half than first half. That has been consistent through the years, except during the pandemic one. So that's for the margin. We have in this margin an increased shrinkage, because that has been one of the questions asked. But this is really very small for us. We see an increase, but from a very low base. As you will see in our store, the stock, which is the most valuable stock, which is around footwear, is not on the sales floor. So the ability for the consumer to walk away with a pair of sneakers they can have one pair, oh no, not one pair, one shoes, which is a demo shoes, but it's not going to impact us very, and it doesn't look cool when you wear it. So we have less issue around that. So that's only, so the increased shrinkage is six basis point of margin in the first half, which is not really significant. In terms of our cost, up 10%, and that is 8.5% if you take like for like, if you take into account the reclassification of the delivery cost. That reflects the investment that Andy was mentioning. We have invested a lot in the first half, and invest in our people first. As you know, in October last year, we decided to increase the self-assistance salary almost by 30% by removing the underage policy. That is 45 million investment in total for our staff that is reflecting in our P&L. Second investment has been around acquisition, the cost of doing the acquisition of Courier, CompiBell, Gap, That is around a 10 million bill for the first half of one of that we have in our P&L. We have a successful effort to improve governance and strategy, which we have, of course, some costs around that. and infrastructure and IT. We are dual running of DCs, so we still have, and that is really protecting us from a big bond, so in UK, as you know, we have opened Darby, which is our new warehouse, completely automized for e-comm, but that is, still doing in Kinsway, we still are doing both in parallel, so we have the two costs. Same in Europe, we have Erlen, which is a warehouse in Netherlands. We are starting to implement all the automation and all that stuff. At the same moment, we are not using it, so we don't get the benefits, so we have the double running cost of that, and that is significant for the first half. On system, we have done a lot of investment, around 10 million pounds around security, because we wanted to make sure that we have the right level of security, so that's a 10 million investment in cyber security. We have the cost of our new HR platform program and our new digital program. So all that has been done at the same time that we have developed the business. If we look at PBT, I think that you see that it's down by 10 million. At the same moment, if you look at PBT before tax, it's plus 26%, reflecting the fact that we have less and negligible impact of adjusted item for the year. And you can see the dividend pressure. So this is a big... test for pronunciation for a French guy, so we move from 13 to 30, hopefully not the other way, but that's Pete trying to have this test for my pronunciation skills, so thank you for that. Trying to pass it. If you look in more details, and this is our premium sport fashion business, which is driving revenue growth. So this is the way we segment our activity. As you will see, premium sport fashion, which is mainly JD, represents 75% of our turnover, 85% of our profit, and all the growths in the first half. This is where we are investing, this is where we are focusing, and this is where the growth is coming and the profit is coming. You can see we are not far away from a double-digit profit. It's down year on year, reflecting the investment that we have done in terms of our cost, and at the same moment, the growth margin reduction. In other retail fascia, we see some organic growth, but the total growth is down because of the divestment of non-core business that we have done at the end of last year. Other business you can see that the same that include our gym business which is doing very well is going down in terms of sales because of the divestment but at the same moment profitability is going up thanks to the gym business. Our outdoor business has been flat in terms of sales reflecting a growth in terms of store sales and a decrease in terms of online sales And in the period, we have some small one-off costs that have been taken, which means that we are a little bit below last year, but should be okay for the full year. Now, if we focus on the premium revenue growth in all regions, which is the one that is the most important for us and which we focus. So what you can see is that all regions are growing and are growing at pace. And you can see the difference between the different regions. The same UK is doing well. And I think that for a mature country, we are delivering 8% growth and 5% like for like. You see Europe, in terms of EBIT, this reflects the investment that we have done because all the investment in infrastructure is through the UK P&L because the PLC is in the UK. That reflects the EBIT that is going down a little bit. Europe has been growing at 28%, 27% organic growth and 15% like for like. North America plus 15%, 9% like for like and APAC 26 plus 15. So you see a very nice picture for our growth and you see the opening of new stores in the region. In terms of cash, you see the comparison between last year and the first half. This is the first half-first half comparison. We generated around 200 million cash from the activity, up from 67 last year, and net cash strengthened by almost 300 million from 1 billion last year to 1.3 billion this year. And on CAPEX, you see that we are increasing our CAPEX. And I will go into more details around our CAPEX expenditure for the first half. So this is our first half expenditure of CAPEX for the last three years. So you see the increase of CAPEX, mainly around the store and infrastructure. But store has been taking 50% of our investment, which is in line with our guidance we give you during the CMD. So that's 50% of the CAPEX going through store. A third is going through supply chain with mainly Europe, which is the airline project, and North America, which is a warehouse that we are building on the West Coast. And system and other is the investment on cybersecurity and the investment in terms of our HR platform. So that was a quick run through our financial. There is an appendix too, which will be on the website by now, and which has a number of detailed financial slides to help you with the model.

Now, before we move to the strategy updates, there is a short video I wanted to share with you. Any boy try fi take my style right now Better bring it right back Got me look good in anything from the latest fashion Or throwbacks from a thrift shop You hear that? Because my style's so different You see my style's so different Yo, watch how my style's so different Anywhere me go, yo, I'm just straight killing it Because my style's so different You see my style's so different Money on my mind, all I hear is ching, ching, ching. Some boy can't afford one chicken wing. Roll with top class, girl, no basic ting. Confidence in myself from the words we sing. Yo, become a style done properly, because I must complement the physical anatomy. When you see me on the street every day looking fresh, well, I swear that the ting is a strategy. But it's just my style so different. You see my style so different. Yo, watch how my style so different. Anywhere me go, yo, I'm just straight killing it. Ha, become a style so different. You see my style so different.

Yo, I'm just killing it

I think the video will do a better job than I do, but let's try to compete with the video. So the strategy as we cover in February of this year is to be and we are the leading global sport fashion powerhouse and retailer in the world. And with four pillars, JD brand first, JD complementary concept, JD beyond physical retail, and JD best for people, partner, and community. So we had this ambitious program to open more than 200 stores, and we are delivering on it. So we will open more than 100 stores in the US, more than 100 stores in Europe, and 25 stores across the rest of the world. And in the US, we are opening in some of the best malls in the US. So we have now opened in Adventura Mall, which is the number three mall in the US by traffic. in America Dream in New Jersey, which is the number two mall in terms of traffic. So that has been part of the opening that we had. In Europe, a big push in Italy, thanks to the CompiBell acquisition, we opened 21 stores. and we continue to look at acquiring those fashion store from distressed retailer in order to accelerate our expansion in Europe and access to location near the fashion retailer, like we have done with Gap Store in France that we will open at the beginning of next year. In the rest of the world, we are continuing our successful store expansion in Australia, New Zealand, and Southeast Asia, where you see some picture of Australia. Our model is a winning one, and the overall return remain unchanged. All the projects that we approve are below three years payback. It's around, on average, two years. And at the same time, if I look at the first half, we are delivering 30% more than the sales that we have in appraisal. So we continue to have the same discipline and accelerating our development. If I look at some of the stores we opened, we don't forget our home country, UK. We opened our 400th store in Derby. It's our 100th store in Retail Park that was opened in July. We have opened, as I said before, in Adventura Mall in Miami. Pitt Street has been our biggest opening ever in terms of sales for the first year, for the first day. And Colombo, Lisbon, we opened for the first time a big store in Portugal. Colombo is the number one mall. And Colombo is part of our top 10 stores in Europe, including the UK, as we speak. So, great success. You can see that look and feel and the quality of the execution, it looks the same. There is a little bit of... There is localization in terms of some product, but it looks the same. I think we show up the same way. We deliver the same quality all across the world. And that, I think, is part of our success and the ability really to understand global trend and to deliver that to the consumer in a consistent way. In terms of brand first, as mentioned by Andy, we have done the acquisition of the minority shareholders that we had in Europe. So we are now in a position to simplify the group and to make it and to be more relevant to our strategy to put JD first. in Iberia and Netherlands with the acquisition of ISIG, the acquisition of the remaining 40% in MIG in Eastern Europe, and the acquisition of minority interests in Malaysia, Thailand, and Singapore that give us most flexibility to accelerate in Thailand. And we are open, we have signed our first franchise agreement with GMG for the Middle East. So as we said during the CMD, we are looking at an asset light model to develop in Africa, Middle East and Southeast Asia. We have a, we are, very close to agreement in South Africa and some parts of South Asia that we will update you as we speak. We are on track to open more than 200 stores across the globe and we are conquering new markets with a no-asset or asset-light model with franchises in the rest. JD complementary concept, as we said during the CMD, we made this commitment to rationalize and focus our portfolio. And I think we are well on the way around that. And at the same moment to continue to develop concepts that we can leverage across the globe, that we can use our infrastructure and that could be complementary to JD. So the first one has been the acquisition of Korea to really respond to this female customer. The female market is underserved in our industry, and we believe that with Courier we have the right offer and the right concept to respond to her. And that will give us the ability to leverage across the world with Sizer, the brand that we have in Eastern Europe, and with Finish Line Macy's in U.S. So we have the infrastructure to leverage and to make it a more global brand. So where we are in the process, we had the approval from the World Council. We are in the pre-notification phase with the European Commission. We are actively answering, cooperating with them to answer their question around market definition. And we believe that this should be a phase one filing and we'll update you when we appropriate, but it's likely to be beginning of next year and of this year at best. We had a strong performance of our complementary brand in North America, DTLA on the east part, ShoePalace on the west part. They've done a great performance. They contribute to our strong US performance. So we are winning with JD, but we are winning not only with JD, we are winning with JD and DTLA and ShoePalace. And we see the potential of this community brand in the US and the potential to consolidate this proposition across the US. So we are looking at the synergies, the ability to consolidate and to deliver a strong proposition around this community brand. And that is in line with JD development. We have rationalized our pinnacle offer. You know, we have this very important for JD to have this offer with size and food patrol that give us the ability to understand the trend. So food patrol and size are trading very well. We merge all the street brand around Ip and that is doing well. And we continue the divestment in the first half with some of the small business that we are going out of. Beyond physical retail, I think it's about three things. The infrastructure in terms of supply chain, the IT, and the loyalty. How we communicate, how we create an ecosystem for our customer. First things, our loyalty program. We commit to do that at the CMD. It's live in Manchester. I'm really happy that we are live in Manchester. So we have 10 stores on the trial. So this is going well. So this trial will end in October where we will If everything goes well, we will be live for the UK. I think the trial has been really great for us to understand how we create this, you know, really this ecosystem, this super app for the young adult. And that's really the vision we have, is to really use the power of attraction that we have to propose a more lifestyle experience to our customer. But the first step is to build this reality app, which is done, to reward the customer with a simple and compelling proposition, which is a 1% cashback. and to grow from that the customer lifetime value to increase our share of wallet and to deepen our customer relationship via partnership. So we are really happy about the first element of engagement with the consumer. I think we will see, in fact, an uptake which is higher than the one we were focusing and we're looking forward to roll out in the UK later in this quarter and in Europe next year. Investment in our technology, as I mentioned, the first thing was to put the house in order. And the first priority was our cyber improvement program to make sure that we have done the first phase, which is to really to look at and to go after immediate weakness in our security architecture and reinforce our first line of defense. So that has been done. We have to spend a lot of money, as I said before, to do that. We are now in the second phase, which is to become that as business as usual. We have a new CISO, which will start in October. Great person that will be able to go to the next phase, which is around being best of class in terms of security. We continue to explore omni-channel. We relaunch Click and Collect. We are doing a test in France as we speak to make sure that we have this offer for our customer as we have been developing our online presence more as a pure player than as an omni-channel experience. And at the same time, we are re-platforming our e-commerce. We sign with Commerce Tool for Europe, so we will have the same solution for U.S. and Europe. Two instances, but the same solution. We are at 50% completion in U.S. of the re-platforming with Commerce Tool, and we start the journey in Europe. That, at the same moment, is not a big ban. We are taking some bricks out of what we do currently to replace it with commerce tool, which is a better tool for the future. Supply chain expansion. We have a clear vision where we want to be. one warehouse for UK because of Brexit. All our supply chain was based from UK in the past and that's no more the case. It creates more cost and more complexity today. So we will have one warehouse in UK for B2B and one warehouse for B2C with Derby, which is We are 20% facility. We moved to 24 hours a day and seven days a week two weeks ago, and we are ramping up and doing well. So I think that we have the double running cost for the time being between Kingsway and Derby. For Europe, Airline is our future facility. The same, we already have a facility in the Netherlands that is not big enough in order to handle the volume, but we are still running that. So for the moment, we are doing partly from this facility and partly from Kinsway for Europe. Tomorrow, as we speak, we are finalizing the equipment. We will have the first order delivered to Ireland in December, and after that we will start to ramp up. But the same is not a big bound. We still have Kingsway and the other facilities that is able to cover the need if we need. So that means that we prefer to have the double cost. than to have the risk of a big bank. So that's part of the European P&L, and that is a major driver of the future profitability of Europe. And we have in the US Morgan Hill, which is on the West Coast. For the moment, our supply chain is East Coast driven, with Indianapolis being the major warehouse that we are using. Having a West Coast warehouse would give us the ability to stop to do something which is stupid that the goods is arriving in LA, go to Indianapolis and go back to the West Coast, which doesn't really make sense. It creates cost, but that's the same. We are looking at 2025 to be full capacity with Morgan Hill. So that is for investment in technology. In terms of our people, partner and community, The first thing is that our commitment to our people. Yes, we have invested a lot, and you have seen that in the P&L for UK. We see the cost of increasing the sale of our sales associate, but I think it was a worth investment. Our turnover is down 50%, divided by two, thanks to that. So we have done the right things for our people, and I think the right thing for the society by investing 45 million. This will analyze in October this year. We have a new CFO, as mentioned by Andy. We have now a global leadership team that is full. Full is not sure it's the right word, but all positions are there with a new CFO, which is Dominic Platt, that will join on 4th of October, a new CTO that will join us mid-October too. And we are building a new HR global platform that gives us the ability to more leverage our people across the world. I went too fast. Best for partner? I strongly believe that we are Nike's number one partner in the world. That's new because it was not the case one year ago. We are the key global partner for Nike in their development. We are the larger global partner for Adidas for original and for the Terra style. That gives us a big competitive advantage on the market. And we are developing partnership with a fast-growing brand, which is ON, ASICS, New Balance, OKA in Europe. We will be the first one. You will see that OKA been in 10 of our store in the UK already. Commitment to our community. We invest in our community. The biggest investment we are doing is to give jobs to our people. Our people are the same as our customers and I think that they recognize that and that creates the attraction for the concept and for us. We have a foundation that is really about changing life of the young people, giving them opportunity to do the best that they can do in life. And that is where we are investing. And we improve our sustainability. I think we continue to be committed to our sustainability agenda. We believe in it. We believe long term. We are A- for the Climate Change Organization, which is several points ahead of all our retailers in that. And we have made a huge investment in terms of solar panels. All our energy comes from renewable sources in Europe and in the UK. And just to come back to the beginning, I think that we have, it's a very solid and very good first half, double digit growth, double digit market share, double digit profit. I think we can see doing well on all the key element of that. We are investing a lot of money, and I think that we feel proud of that, building the infrastructure for the future. and we continue to see US as a key market for us and doing well in the US despite everything that has been said. I wouldn't do no more on the US, no? What do you think? And so let's go to the Q&A. So Pete Fox will be here if you have some very precise question, but we are recording this and there are mic in the room, so please... Yeah, please do that to get the mic, and we'll be happy to answer your question. Yes, and I will stop to talk.

Thank you. Morning, Richard Chamberlain, RBC. Maybe I can just kick off with a couple of questions. You, Regis, spoke about the dual running costs going on in the UK and so on, and then presumably in Europe. overlapping into Europe can you sort of quantify how much those are and when when we'd expect those to to ease off and then the second one is outdoor I know it's a much smaller business but you know how core is that to JD these days is there still significant synergy and I know it's obviously brought North Face and so on in the past but is there significant synergy now between outdoor and premium sports fashion, or should we think of outdoors as sort of non-core for JD?

Thanks. I think outdoor is part of, as you say, it does create a lot of value for us in terms of getting some outdoor brand. And I think that is part of what we have. It's not strategic, but it's not out of scope. So I think that for us, it's something that we continue to develop. We can see some things we can do better in terms of rationalizing our portfolio of brands. And I think that we are looking at that and expanding our offer for the consumer. So we are really... We think it's a good business, and it's a business we want to be in, but that's where we are. In terms of one-off, it's always complicated to say what is recurring and not recurring, but I would say if you take the first half, 40 million, four zero of costs, which are some recurring, some not, and some one of, some not. So that's the magnitude of what is. To give a precise timing, it's not possible. What we don't want is to take the risk. So I think that what you need to understand is that you have the risk to go quick and to say, I close the warehouse, I build a new one. That's not what we're doing. We are too big to do that, and we don't believe it's the right thing to do. So we prefer to get 10 million, 15 million more cost for six months or 12 months, and having the security of doing that in a proper manner. That's the type of magnitude. I think that the biggest one is the cost-benefit of having a warehouse in Europe, which will make the profitability of Europe much more in line with the U.S. one compared to what it is today. Today, it's quite far away, and I think that it's impacted even negatively because we have a lot of opening, the CompiBell one, which is a lot of pre-opening costs. because we pay the rent for the Gap store and the Convivial store for no activity. So that will improve a lot. European profitability shouldn't be in line with the US one. There is no reason, perhaps one or two point difference because of staff costs, but there is no reason why Europe lag behind like it is today.

Hi there, David Roo from Bank of America. Just a couple of questions from my side. It's been about a year since you launched the digital connect partnership with Nike. Could you perhaps just give us your observations and how this has helped the business? And then secondly, just going back to the non-core business disposals, could you give us an update as to what value of businesses have been disposed already and how much more is there potentially to come? Thank you.

So, on the non-core, Pete is a specialist of non-core.

Yeah, so, I mean, clearly not a significant part of the group, but roughly about 450 million of turnover that's come out year on year as a result of divested businesses. There are still some businesses that will be divested and you'll see those in our interim statement as held for sale. But again, in the scheme of the overall group, kind of not huge.

And concerning connected, I think the major benefit of connected for us is to work more closely with Nike in terms of system, putting the system together, understand how we can leverage value together, how we can understand customers. So it has been a great journey working with Nike. really putting the two companies in a very close relationship and sharing a lot of information and way of looking at things. So that has been really the big benefit for the time being. This will accelerate with loyalty program because that will give us another tool to understand what's happening in store. For the moment we only have the ability to understand what's happening online. Tomorrow, with the loyalty program, we will have the ability to understand what's happening. So, great journey. It's a fantastic partnership. I think that we learn to work together and to work in a very nice way and a very profitable way for both companies.

Morning. Kate Calvert from Vestec. Question on Shoe Palace and DTLR. Could you give some more color around the main drivers of performance? Because I would have thought that their demographics might be slightly more impacted by the economy. And then the second question is on your 200 plus store openings. Could you say how many of those are going to be conversions from finish line? And are there going to be any franchise openings? Do you think you might get one of those in before the end of the year?

Yes. Conversion, I don't have in the top of mind.

So about 60 out of the 100. Of the US, yes.

We'd expect to be conversions. And no franchise in it. DTL Super, I think that's what is driving that is is really benefiting from the synergy with the group. And I think that if you look at Shoe Palace, a significant part of the growth comes from the conversion. And we have implemented our handheld device, the way we process with the consumer. We share this information. They were very Nike-dependent. They are now getting a better share of new balance. I think that they are, by working with us, and this is where we believe that there is opportunity in complementary brand, we are leveraging what they are, which are great retailer, great understanding of their customer base, and we give them some process that we have, which are really, you know, we are monitoring the time it takes for you to get the shoes when you are in front of the display and you say, I want these shoes, we are monitoring that, and we are putting a lot of process behind the scene in order to get these shoes as quick as possible. And that's something which, makes a big difference in conversion rates. It's something as simple as that, but sometimes retail is simple, and when you start to complexify, you start to lose your way, and that's one of the things. We give the NL technology to them for assessment, to say, oh, I don't have this pair, but I have this pair. I have this pair in other store, and we have seen an increased conversion in both case. And plus, they are working together. You know, Ditela is a great retailer in terms of apparel, less so in terms of footwear, and the opposite for Shoopala. So, I think it's really the benefit of, you know, working in an environment where they get the trend, and trend not only in the US, so they get a little bit larger view around the world, and I think that it's helping them to see what's happening and better process and more synergy between the two brands.

Hi there, Jonathan Pritchard at Appeal Hunt 2, if I may. On apparel in the States, I think it's now in the 20s as part of the mix. How do you sort of kick on again from there to get towards a sort of Europe stroke UK level? I know that obviously with badge flips, that will increase the percentage, but how do you continue to move that apparel percentage forward? And then secondly, how many discussions or how top of mind have share buybacks been?

Okay, so share buyback, I think it's not top of mind. And I think it's something that we will ask Dominique to review when he join and with a strategy around what we do with our cash. But I think that is definitively the last things on the list. So I think the first that we always say is about investment in our store. Second is about acquisition. After that, if we have time, we will do something around dividend and share buyback. I think that there is no program and there is no discussion around that for the time being. I made a mistake last time, so I will not make it again, to start to discuss about that and you start to be very excited. So I will not make it again. After that, the board will be crossed with me. So I will not do it again. On the first one, on the apparel, you're right, we are increasing. It's still far away from where we want to be. I think that, as you mentioned, it's 50% of our mix in UK, 40% in Europe, and it's 25% in the US. And I think we're... Partly, you're right, it's a batch fleet, and partly it's having better product and better range. I think it's building our expertise. We have someone as a lead buyer from Apparel in UK move to Indianapolis to continue to share our expertise, to share our knowledge, our way of doing things. It's about learning. It's a learning curve. In the UK, we start 100% footwear, and we are now 50-50. It's just a question of time. The good thing is that by having the expertise across the world, in Australia we are 50-50, we are able to move people with the expertise. We are able to leapfrog the time it will take if it's a normal development. The good thing is that contrary to our main competitor, we have the space. So it's not a question of space, now it's a question of having the right product, the right expertise to deliver the growth. I think she's in charge.

Ina Rodani from Shore Capital. Three from me, if it's okay. There is an impressive 20% uplift in sales when you convert store to the JD fashion. Could you remind us of the key drivers of that? Secondly, with the acquisition of the rest of the Iberian business, what are you looking to do differently compared to what you were already doing in the region on top of more conversions to JD, presumably? And there is a mention in the statement of a selected growth opportunity in the UK. Could you maybe provide some color on what those are? Thank you.

So conversion, yeah, we still see 20, even more than that. I think the main driver for me is it's a new store, a new proposition. You get more excitement. I think the other thing is around, you know, so that's a brand thing. The fact that the mix is different. We have more apparels and we're creating more traffic. But I think the main element is the modernity of the concept and the quality of the execution. I think that's where we see the benefit. In terms of the minority, I think that, first, I think it simplifies the group. I think it was complicated, and I'm not sure we really have been able to implement our strategy by 50-50, because there is someone else who has a different view around the strategy. So it gives us the ability to accelerate JD development, and that's really what we are looking at, is how we leverage those businesses where We have started to develop JD, but I don't think we put all our resources and our priority around developing JD because they had another business and they tried to do a little bit of the two. What we will have a clear view, which is JD first, If I take Portugal, for example, we know that we are on the space, and Colombo has been a great wake-up call for us, where our store in Portugal, they are 150 square meters. They're really tiny, they're doing well. But we know that the best proposition for JD is a 400, 500 square meter. And for the moment, we have not found those door. I think there is a way to accelerate that by leveraging what we have. So I think this is about really leveraging and making sure that JD first strategy is implemented in those area. On UK, I think that UK is growing. You see the numbers. I think that we are expanding the store size. Every time we do that, sales per square foot go up. We still have this... Really fantastic challenge. Where is the maximum? We are trying to get there and we're still not there. Hopefully in Trafford, where we will open a 100 shop window, I don't remember the size of the store, but it's a mammoth store, we'll see perhaps starting to see a return on space diminishing. For the moment, we have not seen that.

Good morning. Warwick Okindes from BNP Paribas Exxon. Two questions about the U.S., please. The first is just could you give us a bit more insight into how you've traded what's obviously been a very promotional industry in the U.S., tactically how have you approached the U.S.? And secondly, perhaps for Pete, could you tell us what weeks cover you have of inventory in the U.S. and how that compares with European business?

We'll start off

Sure. So, I mean, overall in the US, our stocks are higher year on year at the end of July. And that really reflects the kind of the abnormally, if you like, of the prior year where we were kind of understocked, kind of running up to July. So stock cover has increased. It is elevated relative to the UK, but not by a significant extent. And I suppose the thing to bear in mind with the US, when we're talking about kind of 100 new doors for the year as a whole, a lot of which is weighted towards the second half, obviously we've got stock that's in the business, kind of ready for those new stores.

Yeah, and I think that in the U.S., what happened, as you have seen, we say it, is June has been not a great month, which is a month where all our competitors went on discount, and we just didn't have the stock. And we follow what happened in the market. We... You know, we are certainly the best retailer out there in terms of the difference between intake margin and gross margin because we don't discount. That's not what we do, and we tend to be clean at the end of the season. That's what happened in the U.S. in June. That's why we have a blip of sales in June. And when the new season comes and starts in July, you have seen some of our competitors saying July was difficult. July was a very good month for us because we have new stock, and it was a full-price month. Yes, we will be always better when it's not around promotion, and we are not a promotional retailer. But at the same moment, if we need to follow, we will follow. That's not something we will not do. But for the time being, our stock position is a good, it's where we want to be. In fact, I spend a lot of energy to get enough Air Force One in our store, so I've been monitoring store by store to make sure, we were losing sales, especially in June. We had no Air Force One triple white in our store, which, you know, it's a bread and butter line. So we have been clear, and I think we get the commitment from Nike to make sure that we will never be out of stock for Air Force One triple white and triple black in our store, and that's something where we are monitoring that week by week. So I would say in U.S., I'm more stressed about not having enough stock than having too much stock. The way it happened in the market is that they look at us and they don't see how much growth we are delivering. So they see the rest not doing well. So the manufacturer is just a little bit surprised to get so much order. So they say, oh, that's perhaps too much. So we keep running out of stock for the time being, which is a good problem to have.

Just a couple of quick follow-ups. Last year was all about footwear while apparel was pretty weak. Have you seen any distinctive trends this year between the two sides of your business? And Obviously, on minorities, you've now bought out virtually all of the minorities, with the principal exception being that of the Mershows. Is there any likelihood that you'll come to an agreement there, or should we just wait for those call options to roll through as scheduled?

Yes, a good question. I don't remember last year being really dreadful. Apparel is more volatile because the weather has an impact, whereas in footwear it doesn't. So the good thing about having footwear and apparel, when it was summer... So summer in UK was in June and September. There was no summer in between. But... When we had this fantastic weather, we did very well in footwear and we sold shorts and t-shirts and not the big piece. So I think that for me, apparel will have always more story than footwear, which is a steady business and with no impact of the weather or no significant impact. And the same for outdoor. Lee, who is running our outdoor business, I'm calling him Mr. Meteo because he's always coming at the trading call and saying it was shitty weather. Can you give me something else than the weather? But if you need the weather, he's the guy for you. I think footwear has been doing better this year, a little bit better than apparel, but mainly because of this peak and all that stuff. But in total, our mix is not moving significantly. Concerning the minority shareholder, you're right, the last one and the big one is the US one. I think that the mayor showed adamant that they want to continue in the way we are doing things. I think that we are not in a hurry. I think we have an agreement that is in place and that, as you say, which is 2025 and in full trench. I think that that's the likely outcome of that.

I think that's true. I mean, we're very close to the Merchios. We've got a very good relationship with them. You know, Regis has expanded George's kind of remit by giving him the community brands to run. So he's got DTLR and so on. So I think he's very happy in terms of the day-to-day life. And it's a very good relationship at the moment. So, you know, the shareholder agreements contain plenty of clauses to play out over time if they're needed. But at the moment, it's a very happy coexistence, really. Is there any reason why you wouldn't buy them? No, but I think having them in and positive and operating shoe palace and help, you know, is good. And... As you've seen with Iberia, which lasted 12 years, a happy relationship, these things have a life. And at the moment, the life with the Mershios is a very happy coexistence. At some point, they may want to go out. At some point, we want to buy them out. But at the moment, it's a very steady state.

Hi, Alison Liger from Numis. Could I just ask a quick question on CapEx and sort of balance of the year in terms of investments? So 210 or so in the first half versus the guidance of 535, 600 for the full year. Take that store kind of openings are more weighted towards the second half. Is that still kind of level of CapEx guidance you're expecting or is there a chance it might be kind of bottom end of the range or sort of below? I guess within that's the question in terms of how you're feeling about that kind of store opening pipeline.

We are on track. I think that we will open 200 plus stores. So I think that is nothing that says that it will be different. And we will spend the money.

It's one of the great mysteries of life, why every retailer, new space is always back-ended. I've never really understood it.

In our case, I think it's because we accelerated a little bit after the CMD. Hopefully, financially, frankly, it would be much better to do first half than second half. So financially, it's the wrong decision, but we are in for the mid-term and long-term. But financially, there is all reason to postpone and to open more in the first quarter than in the last quarter.

Good. I think we're there. So thank you very much indeed for all the questions. That was a long list. And yeah, we wish you well. And thanks, Regis, for the first half. And good luck for the second. Thank you.