Jd Sports Fashion Plc New

Hello to everyone. Welcome to the one who joined us on the webcast. Welcome to JD Update. Unfortunately or fortunately, as he will explain to you in his video, Andy Higginson, JD Group chairman, is not with us. But let's share with you his welcome video.

Good afternoon. It's Andy Higginson here. I just want to apologize for not being with you today. The reason I'm not with you is I'm in Vancouver visiting my eldest son, who I've not seen for 18 months, and more importantly, meeting my new granddaughter for the first time. I'm afraid that took precedence on this particular occasion. What I wanted to do is just really as an introduction to the day, give you a little bit of a view from the chair, a personal view of what's happened in the last two and a half years and the progress we've made. There's no question that we failed to manage our city comms properly. We got our forecasting wrong and that's led to a disappointment, which you see reflected in the share price. But I think what it does mask is just the underlying strength of this business and the great work that Régis and the team have done, which perhaps doesn't get the attention it deserves. We've been here two and a half years now, I think it is, and 2022, when we join 2022, it seems like a bit of a distant land in a way. We inherited this incredible platform, this global platform from which to grow and which we're so grateful for in terms of the way we work every day. Having said that, the infrastructure that we inherited, the good and the bad, the infrastructure was very weak. And the infrastructure was weak on IT. It was weak in terms of our online offer. It was weak in terms of our distribution infrastructure. And most importantly, particularly in the context of the city, our accounting and finance infrastructure was woefully short of what was needed. We spent two years, two and a half years fixing a lot of that. It's important to say that we have a strong and stable leadership team. You know, we have grown the business, okay, with the help of new stores and so on. But we've continued to grow the business through a very difficult time, trading-wise. We have achieved growth. We've retained strong cash flows and retained a very strong cash position. We funded the two acquisitions in the last year out of our own resources. And we've rationalized our strategy to a significant extent. We sold off the sprawling fashion business. We bought in minority stakes in MIG and ISRG in Spain. We bought new acquisitions of Korea and Hibbert to come into the business. And we are in the process of rationalizing our DC strategy around the world. Most importantly, we now have a clear and obvious platform for growth as we look forward. Our strategy is very simple, in a way. We are selling lots of sports-related gear to customers, primarily through JD, which is our international brand. that's present in all the markets. But we have complementary businesses that allow us to sell to a wider group of similar sort of gear, which gives us heft in the marketplace, whether that's with the brands, whether that's with the landlords, whether it's with the distribution companies that send our products out to customers. All of that helps, and they're complementary to the JD First strategy. So where do we go from here? Well, I think looking forward, we're obviously in an uncertain world. It doesn't take me to tell you that the political developments of the last few weeks have been seismic. But we're in great shape. We're a business that generates a lot of cash. We can fund our own expansion. We're able to take a long-term view and invest through difficult times to make sure that we come out of those times in fantastic shape. We have really great growth opportunities in front of us, organic growth opportunities primarily. whether that's in Europe, in Asia, or of course in North America, in our fledgling Canadian business, or getting JD into more cities across the United States. I think that opportunity to growth comes in apparel as well. We have an opportunity to get our apparel business stronger in the U.S. and see good growth from that. And, of course, our digital and omnichannel business needs to capitalize on the good work that's already been done and really make sure that we're available to customers whenever it suits them through our online portals in different markets. As I say, we have the strong financials to be able to do that. We have our own cash flows to which to do that. We're not dependent on others. We can deliver that ourselves. And, you know, we look into this difficult time for world markets with a great degree of confidence so we can continue to deliver a strong JDE performance around the world. Anyway, I wanted to leave it at that. Hand over to Rajit and Dominic now to take you through the strategy in the hope that you'll see the great strength in the business as well as some of the challenges we've faced and face going forward.

Great. Thank you, Andy. So, good afternoon. Good morning to the U.S. and for our U.S. joiners. Please be reassured, as far as we know, and as far as the latest news, there is no tariff on webcast. So we should be okay for the time being. So after that, I'm Régis Schultz, I'm JAD CEO. I'm joined here today by Dominique Platt, our CFO, and Michael Armstrong, our JAD Global Managing Director, who I'm sure you will have plenty of questions for. As Andy has said, we have been moving at a fast pace over the last two years, investing in our organic and inorganic growth to become the leading global sport fashion powerhouse and developing the infrastructure and the governance you will expect from a company of our size. At the same time, the market has changed, and it is now the time for us to move to the next phase of our strategy by adapting our plan to focus on organic growth and on profit, leveraging last year's investment to improve return to our shareholder. So let's go back to our CMD in February 2023. We share with you our vision for JD Group to be the leading sport fashion powerhouse structured around four pillars. JD brand first, JD complementary concept, JD beyond physical retail, and JD best for people, best for our partner, and best for the community. JD Brand First is our commitment to put JD at the forefront of premium sport fashion, ensuring that we are the first choice for consumers around the globe and our first priority as a group. JD complementary concept is about broadening our customer reach, our geography reach, our category reach, and contributing to our scale. JAD beyond physical retail is our investment in infrastructure, governance, and digital transformation to support our past and future growth. Last, but most important, JAD people, partner, community, reflect our commitment to our people, to our partner, and the community in which we operate. And we set out three objectives using a sport reference, we are in sport, with a triple-double objective, double-digit growth, double-digit market share and double-digit profit. So let's start by focusing on, before focusing on the next phase of our plan, I would like to share with you our reflection on successes and challenges over the last two years and the lessons learned. So starting with our success. First pillar, JD First. JD Brand has a global organization with one leader being Michael. We have now a consistent customer proposition across the world leveraging our product merchandising marketing expertise and our excellence in retail execution. Michael has been with GAD for more than 25 years, starting in-store, moving to buying, merchandising, marketing, general manager. He is GAD, and he's certainly one of the most talented and experienced leaders in our industry. Second priority was to accelerate our store opening and conversion program to capture a larger share of the market. We set up the ambitious target to open 200 new JZ stores per year, including conversion, with a disciplined approach and three years payback hurdle. We have done it, with 405 stores open, 84 conversions, and a payback of less than three years on average. And Dominique will give you more details around the numbers. And outside of our strategic market, which are Europe and North America, we stopped our existing model of joint venture or acquisition to develop a franchise model with no capex. Done with the opening of Middle East, South Africa, and the flip of our Indonesia GAV into a franchise. Second pillar of our strategy, JD complementary concept. We have simplified the group with the divestment of non-strategic businesses and the acquisition of the minority interest in ISAG and MIG. It has accelerated the development of JD in Iberia and Eastern Europe. And we have done two acquisitions in our strategic market in US with EBIT and in Europe with Korea. Third pillar, beyond physical retail. We have expanded our US loyalty program, JD Status, in the UK, in Ireland, in France, and Eastern Europe, with more than 10 million downloads globally. This is a foundation to develop a closer relationship with our customer, more targeted, more personalized, and more valuable. We have moved from a multi-channel to an omni-channel model. OmniChanel, as you know, is a right customer proposition. It's a competitive advantage that we have versus the D2C and versus PurePlayer, as it is more efficient and less costly. For example, we have developed our ship-from-store capability to shorten our lead time in Europe and to reduce our fixed costs with the closure of a distribution center in the UK. This ongoing omni-channel program, a disciplined commercial policy, and the optimization of our digital marketing spend has resulted in a significant improvement of the profitability of our online business to a double digital operating margin. I'm pleased to say that the gap between offline and offline is almost minimum today. We hire a very respected and experienced leader, Wim van Hals, to build our global supply chain and to fix our European operation. We have opened three major warehouses, one in each of our strategic geographies in the last 12 months. With Dominique joining us 18 months ago, we have embarked on a major governance process and control program. This program started with the separation of the chair and CEO position with the appointment of Andy Higginson as J.D. Chair in July 2022. Andy has restructured the board and brought more expertise, more experience, and more U.S. exposure. We have changed auditors. build from scratch an audit and risk team, double the size of the group finance team, triple our legal team, and build a cyber security team. Just to give you an example of the things that we have fixed, IFRS 16 lease adjustment, where I calculate all on Excel. It is possible when you have 300 lease in UK, not when you have 8,000 lease across 35 country. And I can go on and on on different example. Best for our people. To serve our people better, we have put in place for the first time in JD a global engagement survey. In our last year survey, we reached 88% participation from our almost 100,000 people and deliver a record level of engagement. It demonstrates the commitment and the motivation of our people to drive JD long-term success and growth. In a nutshell, we have done what we say we will do, but we have faced challenges too. And if I go to the challenge, first and most important one, we have seen a slower growth of the sportswear market across the world. This slowdown has impacted us, especially in the UK. With more than 400 JD stores, we have reached our maximum store number. With a slower market and a high increase of people cost, our profitability has been challenged. UK is a mature market where we need to focus on productivity to maintain our profitability. In Germany, we have not delivered the profit we were expecting, so our priority would be to fix our economic model before growth. And to make sure we continue to be disciplined in our expansion, we have done a full review of our Accelerate expansion program to adjust going forward our plan, as Dominique will explain to you. Our second big challenge has been the cost to fix the past under investment in our people, in our infrastructure, and in our governance. It is fair to say that it has both taken more time and will require more cost than we originally anticipated. First, the European warehouse project, initiated after the Brexit, has seen delays and increased costs. We are more than one year behind the original plan. We have changed two times the team in charge, but we are now on track. This has a major impact on our European margin profit, as Dominique will show you in his section. Second, over the past two years, we spent around £60 million of OPEX to secure IT infrastructure and back-office systems. We have put in place IT general control, built a cybersecurity function, and we have upgraded non-supported legacy systems with new solutions. As of last month, we have a new HR IS system, a new solution for our store network, and a new platform for our e-commerce. We have implemented SaaS-based solutions, resulting in OPEX rather than CAPEX, and with a much higher short-term impact on our P&L. Third, our investment in our people. Not only we had to invest in our head office to upskill our finance and governance structure, but we had to invest in our people in store to correct some past practice. We have removed the age-banding in the UK, resulting in an increased cost of £45 million per year. At the same time, wages, especially minimum wage, have increased significantly across most of the markets we operate, resulting in an additional cost of more than £100 million in the last two years. Last, the length of time, the cost and the remedies he took to complete career acquisition has been horrendous. Lesson learned, doing M&A in Europe is not welcome. Of those extra costs and delays, we are not delivering upon the third element of our triple-double, a double-digit operating margin. Our operating margin has decreased for the reasons I just covered, increased staff costs, investment in infrastructure and governance. So despite the fact that we have delivered a positive impact on our operating margin of the accelerated space expansion and the divestment of businesses, If you look at our first two doubles, double-digit growth and double-digit market share, I'm pleased to say that we are on track to deliver the growth and the market share. If you look at growth, the revenue growth coming from our space growth is in line with our plan. Our like-for-like is below the plan, mostly because of offline, online, as our priority has been, as I said before, to build a profitable and sustainable economic model versus short-term sales. But it has been compensated by M&A activity with the acquisition of Korean EBIT. In terms of market share, For those who remember, in 2022, we only had three countries with more than 10% market share. Now, we have more than 10% market share across Europe, and JD Group is a market leader in UK, Ireland, France, Spain, Portugal, Poland, Greece. In North America, JD is now bigger than Footlooker, and we are a market leader in Australia and New Zealand. As a conclusion, we have done what we said we will do. We have delivered the space growth and the market share. We have fixed the governance issue. We have invested in the infrastructure and the people, but at a higher cost than forecasted and a lower like-for-like as the market has changed. The market has changed. And when we did our CMD, our like-for-like for Q4 was almost plus 20%. In fact, it was plus 19.6% to be precise. And the Euro-Romaneter forecast for the market growth was 8% per annum between 2022 and 2027. In reality, the market has grown at around 3% per year in the last two years. So global sport fashion is an attractive and growing market. But we now expect the market to grow at a slower rate over the medium term, in line, or slightly lower than the last two years, around 2% to 3% annual growth on average. And the last word is important, average. Retail and even more fashion, because we are in fashion, are volatile and cyclical. It's never linear growth, especially in the current environment. At the time of the CMD, we were also in a market of high product with a concentration of sales on key franchise. We have seen now a market with multiple new emerging brands and less concentration on key franchise. And I will go into more details because I think it's important to understand our market in more details. If you go in more details of the market dynamic, footwear and apparel market are flat market in the world. It's not growing. So the driver of sportwear growth is an increased penetration of the market. And if you look at the chart on the left, you will see the sportswear footwear was 27% of the total footwear market in 2010. And over the last 15 years, the penetration of sportwear footwear has increased by 17 points to reach 44%. Sneakers are becoming the shoes of every day. Not always here, but it's coming. And in most occasions. If you take the U.S., the most advanced country, the penetration of sportwear footwear is already higher than 50%. Concerning apparel, which is the chart on the right, it is the same, but at a lower scale and at a lower penetration. If sneakers are becoming the shoes, sportwear apparel is one style, part of many. It's a basic and a fashion element of the customer wardrobe. So it is clear that footwear penetration has driven sportswear globally. And we have seen an acceleration of the penetration of sportwear during COVID-19. But post-COVID, the trend has continued, driven by casualization and active lifestyle. And it is important to say that the penetration of support wear in the total market has increased every year in the last 15 years, pre-, during- and post-COVID, and is still growing. However, as the scale of the sportwear market has changed and the penetration has increased a lot, the growth has been less quick, especially in percentage. 100% of zero is still zero. So when you get bigger, the percentage gets lower. Therefore, we forecast a more modest outperformance of sportwear versus the wider footwear and apparel market going forward, resulting in a slower market growth. In a slower market growth, and a market with growth coming from emerging brands and new products, our strong, global, agile, multi-brand model gives us the ability to grow ahead of the market. And it all starts with the consumer, JD customer, our customer. Our greatest strength is our focus on our customer, our ability to see the world through the mindset of our customer. Our customer is a young adult, the 16-24 years old. They move fast, they wear the latest brand, and take on new trends quickly. They want more assortment, more access, more choice, more brands, and more looks that blur the line of sport and fashion. They are looking at global trends via TikTok, social network, they are global. They are not monobrand. They want to be free to mix brands, to mix sport and fashion, to shop with their friends in a multi-brand environment. They are trendsetter and critical for the brand. And JD is responding to their need. Our concept is new, modern. We are global. We are multi-brand. We are sport and fashion. So this close relationship with a young customer gives us this strong partnership with the brand. We are usually the number one partner in the world. We are a full price retailer, so we access new product, innovation first, and we attract brands in the early stage. For example, we were the first major retailer in UK to sell on running. This is because we are a full price retailer. We are connected to our customer, so we are first to discover, to capture trends in the key sport fashion city where we have store. We are defining range by store. This gives us the ability to test and scale brands, new franchise, new product, better than anyone else. We pride ourselves to be the best partner for the sport fashion brand. This strong partnership with the brand gives us the ability to offer the latest and the greatest product to our customer. We are a demanding partner with the brand. working closely with each of them to curate their offer, to select product, to develop product SMU exclusive to us. As a result of that, half of our apparel and 30% of our footwear offering is exclusive to us. When brands are not able to respond to our customer need, we are developing our own product, our own brand, which allow us to target niche or new category. Danin is a good example. We saw the trend coming and we develop product with our own brand supply and demand to respond to the trend. But to offer the latest product, we need to be fast and agile. And let's look at some facts to demonstrate our agility. On the slide, you have the mix of ourselves in footwear. This is on the left. And apparel on the right. First, you will see that we are not looking at our range per brand. You always ask us the question around brands. That's not the way we build our range. We build it by category, by style, to make sure that we are customer-led. And if you take footwear, and this is a simplified segmentation, we have four key categories. Running, new running, what we call new running or what you call performance running, but that's the same for us. Retro running. retro basketball, classic or tennis, Skate, and to simplify the chart, we put terrace in it, which was more football, I would say, and other. You can see the movement if you take retro basketball, which is from 20% in 2020 to almost 40% of our sales in 2024, and back to almost 25% in 2025. So the question that you always ask us, are we agile to change? Yes, we are. Yes, we are doing it. And if you take running, we believe that running will soon be back to 60% as it was in 2020, especially with the development of new running or performance running with OnRunning, Oka, Adidas, Evo, and the coming new exciting Nike running product. So thanks to our agility, we have been able to navigate the change of the trend and deliver 9% annual growth in footwear during the last five years. If you go to apparel, you can see how we have been able to pivot and develop performance apparel and street fashion to continue to grow at a fast pace with an average annual growth of 12%. Performance apparel show our agility to capture growth within the sport category and to pivot when things are changing. This has been done very quickly, as we are more than double ourselves in performance every year in the last three years, and grew more than five times over the last five years. Our development in street fashion, which is the other part, you have core sport, performance, and street, has demonstrated our ability to extend to new category, even when the brand are not responding to the customer need, by developing our own brand or new brand to respond to this customer need. So we are agile, we drive trends, and as a result, we have a strong model that outperforms our peers in all core operating metrics. If we compare ourselves, JD Group revenue growth rate is almost five times the market average, with particularly strong growth coming from our under-penetrated market, Europe, US, APAC, demonstrating our growth potential for the coming years. We have expanded globally at a faster pace than most. This global diversification provides us with a competitive advantage over those who remain heavily reliant on one single market. More important, JD Group store productivity is about 50% higher than competitor. Space productivity is the most important KPI in retail, as it means that you can secure the best location in the best mall and deliver a superior return. Our mix, with a higher penetration of our partners and our peers, partly explains the performance as it increases frequency and traffic. And our digital revenue share is higher than many others. And with the development of our omni-channel capability, we have now a profitable business model close to the profitability of our store. Those strong metrics make us the chosen route to market for our brand partner, increasing our agility of our multi-brand model. Now, let's look to the future and explain how we are adapting our strategy and taking action to deliver improved returns to our shareholders. First, we are refining our growth strategy to take into account the slower market growth, the achievements of the last two years and the lessons learned. As I already mentioned, UK is a maturing market for us. It is our most established market. Our focus will be on productivity and maintaining our market-leading position by investing in bigger, better and fewer stores and keeping our store estate up to date. We have the huge competitive advantage to have short lease and a well-invested store estate. In North America, having completed the acquisition of EBIT, the focus is to develop JD Brand and to improve our return on space by leveraging our different fascia, which I will come to in more detail in the next slide. In Europe, this is a case of refining our approach. We have seen great success, tremendous success in south of Europe, in Italy, Spain, Greece, Romania, Portugal. But it's fair to say that Germany on the other side has been more challenging due to high cost and less appetite from the consumer on sport fashion. So we will take those learning and direct future investment on the market where we see room to profitable growth. Having finally completed the courier acquisition, we will leverage a strong position in France and use JD Group's strong position in Spain and Italy to accelerate courier expansion in those markets. In Spain, Portugal, and Greece, we have a strong sporting goods business. Since the purchase of the minority shareholding, we have taken full control. We have exceeded Netherlands and converting the number of stores to GED in Iberia. We are now very well positioned to focus on developing our market share in sporting goods and our profit. In relation to the rest of the world, we are looking to expand our reach via our Capital Light franchise model. So our second priority, leverage our investment in supply chain infrastructure and governance and delivery efficiency. As mentioned, we have opened three new warehouses. We have all the costs of doing that in the last 12 months. They are all in operation, but only one in full operation. So Airline for Europe should begin to deliver benefit beginning of next year, now that the project is back on track and set to be fully live at the end of 2026. Morgan Hill for our U.S. West Coast will be our first multi-brand warehouse in U.S. end of this year. This will unlock improvement in the speed to market for our West Coast store and give us a blueprint to move our other warehouse in U.S. to become multifaceted. This will deliver significant cost savings and increase our capacity in the future. On digital, we are at the end of a two-year investment to re-platform our omni-channel business. We'll be live at the end of the first half in the US and in Europe-UK in 2026. In both cases, we have incurred significant double running costs and constraints in delivering a fully omni-channel experience to our customers. Meanwhile, we are currently working on opportunity for efficiency in our head office in UK, in Europe, as well as post-acquisition synergy across the back office function in North America. As a conclusion, our strategic framework stays the same, but our focus changes with two clear priorities, refine our growth strategy and deliver efficiency. Let's now go to our biggest opportunity and to spend a little bit of time on our North America business, since it is now our biggest market, as well as the one where we have seen the most change in the last year, and the most important, the one where we see the biggest opportunity. So this is history, but we entered the U.S. in 2018 with the acquisition of Finish Line. We have done two other acquisitions with Shu Palace and with DTLR. We have three times, not once, not twice, but three times doubled the size of the business and more than quadrupled the profit of the business we bought. Our secret sauce, JD Group operational excellence in buying and merchandising, developing a truly agile multi-brand customer proposition and leveraging infrastructure. And we look forward to continue this with EBIT. I hope that this track record show on the slide speak for itself. But I cannot resist to share two numbers with you. In 2019, we were making a turnover of one billion US in the US, one US dollar in US. And in 2025, our turnover will be six billion US dollar, bigger than Footlooker in six years. And our geographical reach has now dramatically changed with a coast-to-coast and a full coverage of the country. And I thought it would be helpful for us to outline the different fascia we operate in North America. Currently, we operate six key fascia, JD, EBIT, finish line, shoe palace, city gear, and detailer. And together we have a comprehensive geographic and customer coverage. We categorize them strategically into three buckets, mass, reach, and focus. Our mass is JD, aligned to JD brand first. So US JD customer is the same young customer as our global customer target that I described before. JD operates in key venue, mostly A and B mall. JD store are destination store, the best sport fashion store in the catchment area. The ones that deliver the most sales compared to everyone in the market. Our reach fascia is EBIT. It's a sport fashion convenient format, expanding our reach in underserved market and rural area. It's a JD local convenient offer. Finish line, corner in Macy's is a great business that extends our reach to an older, more female customer, a little bit like Korea and Europe. And our focus is our city specialists, ShoePalace, DTLR, and CityGear, a community store in urban area. All our customers crew toward specific community, the Hispanic community for ShoePalace, the African American community for CityGear and DTLR. They are mostly strip mall venues with some presence in malls. They are fully complementary on a geographical basis. Shoe Palace are situated on the west coast and southwest. DTLR stores are on the east coast and in the middle, City Gear stores fill the geographical gap between Shoe Palace and DTLR, with less than a 10% store overlap with the two other bannocks. So looking at the difference in terms of return on space between City Gear, City Gear is doing around $250 per square foot, and DTLR and Shoe Palace, which average around $500 per square foot, we have taken the decision to rationalize our portfolio and to convert City Gear store to DTLR, with a limited number of stores converted to Shoe Palace. The five pilot stores have shown strong uplift in both sales and profitability post-conversion. It looks like a triple-digit increase in terms of sales. And we will be finding synergy and efficiency through rationalization of the back-office function with those fascia. As said before, we have a strong track record in the U.S., double sales and credible profit of all our acquired business. A strong team and a strong plan to continue to do what we have done in the last six years, leveraging existing assets to deliver an improved performance and a high return. In addition, I'm pleased to share with you that we have agreed with the Mershaw family, our current minority shareholder in our North America business, to extend our put and call arrangement to 2029 and 2030, to give both parties the ability to fully leverage investment made in the last two years. I think there is no more proof to demonstrate the confidence of the Merchants who are managing our city specialist concept in our North America business and give us more visibility for our capital allocation that Dominique is going to cover in his part. So before I hand over to Dominique, let me share with you four key messages. We are adapting to a slower market growth with a refined organic growth strategy and a focus on delivery efficiency for our past investment. We have a strong and agile multi-brand, multi-geography model. We have demonstrated our ability to navigate short-term headwinds. We are positioned to outperform in North America and Europe by leveraging our different customer proposition. We are disciplined and focused on delivering shareholder return with a strong and stable cash generation. We have delivered around 1.3 billion EBITDA for the last three years. Now I will hand over to Dominic to go through the financials and our strong cash generation, which will fund growth and deliver return to our shareholders. Thank you.

Normally a video separates Régis and me, but Andy took that today, so no video. Right. So thank you, Régis. I'd like to spend a few minutes talking you through the updated plan and how we're evolving our capital allocation priorities. When we announced our five-year plan back in February 23, the global sportswear market was very strong and there were plenty of high-heat products helping to fuel that market growth. Looking ahead, our market will continue to grow, but less quickly. Back in 23, against the background of stronger growth markets, we announced up-weighted growth and infrastructure and governance investment plans. Two years into delivering the strategy, reflecting a market growing less quickly, and the significant investment that we have made in the business to develop our infrastructure, we're moving to a new phase in our strategy. Our investment over the medium term will be focused on growing share, where we are underrepresented. We'll start to benefit from the investment we have made in our infrastructure and governance and deliver efficiencies across the group. And finally, we will move to balance the use of our strong cash generation on both investment in longer-term growth for the group and delivering returns to our shareholders. Now, let's turn to the updated plan. Now, I admit there's a lot on this slide, but I hope it's helpful in laying out how our plans by brand and geography work and how they work together to deliver the overall improved performance and returns over the medium term. It lays out the value driver for each business and the key levers we are working on to deliver that value. The table shows the share of group revenue that each area represents and how you see that evolving over the medium term. We also show the operating margin, how we see that evolving too. Just to clarify, Operating margin here reflects operating margin, including lease interest, as we think that gives the best indication of underlying profitability. We'll provide more detail on that with our year-end results. Finally, we indicate where we will prioritize our capital expenditure. So, working across from left to right, we start with JDUK, where our focus will be on improving the overall productivity of that business. JDUK is at the heart and soul of the group. It has a market-leading concept and a good store estate with almost all stores providing a positive contribution. However, it's important that we continue to invest and manage our space and locations to maintain that leadership, ensuring consistent customer experience and optimizing productivity across the estate. Secondly, we will invest to support continued growth in our profitable and highly successful gyms business. And finally, Cost pressures are impacting our UK operating margins. We will now focus on delivering efficiencies in the face of those cost pressures to stabilize our profit margins. Turning to North America, we already have a scale business, but there remains a significant growth opportunity. We will grow revenue and profit by growing space for the JD Fascia, optimizing our complementary concepts, and delivering supply, chain, and back office synergies. So first, we will continue with our successful JD store opening program, targeting 700 to 800 JD stores, and completing the conversion of the finish line stores to JD over the next two to three years. Alongside this, with critical mass for the JD brand in key population centers, we will increase our investment in brand awareness to underpin the further success of that business. Secondly, we have a clear plan to leverage our complementary portfolio of faces. This plan allows us to extend our customer reach and provides a range of store economic models that will optimize our returns in different size markets, something I will return to later. And as Reggie said, we will be rebranding the City Gear stores we acquired with Hibbert into DTR and Shoe Palace, replicating the successful finish line to JD conversion program that we have been running. And finally, important to improving returns is the delivery of synergies following the acquisition of Hibbert through developing a multi-facet supply chain and support function efficiencies. These, together with growing scale, will see the North America operating margin edging up over the medium term. In Europe, our plan will grow revenue and improve the operating margin to high single digit. We can segment the plan into three. Firstly, looking at the JD fascia, we will focus on growth in key markets, adding new stores where we are underrepresented, and delivering margin and supply chain benefits as we complete the automation of our Haarlem DC in the Netherlands. Secondly, with our complementary concepts, we will continue to convert to JD where appropriate and look to drive efficiencies across the different fascias. And thirdly, we're focused on maintaining the strong performance of our sporting goods businesses in Europe, We will continue to grow our market share, opening a small number of new stores and improving efficiency as we grow scale. Quickly, touching on the rest of the world, this is a JD Fascia growth story. We will continue to grow our store estates in Asia Pacific, where we have existing successful businesses. Elsewhere, we will grow the JD brand through franchise, a capital light route to bringing the JD offer to a wider set of customers. And finally, we will continue to improve margins in our outdoors business. This framework and priorities by region will drive our capital allocation, directing our capital expenditure to support the key areas of growth and profit increase. This will see 70% of our capex directed to North America and Europe, with the balance spread across the rest of the group. So how will this drive shareholder value over the medium term? Well, firstly, we will grow our revenue, led by our investment in space growth. We will see the contribution from space growth settled at around 3% of revenue in the medium term as our CapEx becomes more targeted and the like-for-like base grows larger. Next, we're planning to deliver profit growth ahead of sales. We will drive operating leverage not only through our growing scale, but as we deliver benefits from the significant investments we've made over the last two years and drive efficiencies in the business. And thirdly, we will focus on generating stronger cash generation through more focused store investment and lower supply chain investment now that our major infrastructure investment programs are behind us. And using the light capital or capital light franchise model to expand outside our existing markets. Added up, this means we'll start to improve our return on capital and enhance returns to shareholders. Now, this is the view over the medium term. Each year, of course, will reflect the underlying market in-year. And in the short term, as you look to the current year, and before the yet-to-be-determined impact of recent changes to tariffs, it's also a year of transition as we move from a period of significant investment in M&A to a period focused on leveraging those investments and delivering improved returns. Now, a key element to improving returns is a focus on our operating efficiency and cost base. Our profit margin has declined in recent years, reflecting a slower market and the investments we have made in people and our infrastructure. Looking forward, there are a number of factors that will support the stabilisation of and then improvement in our operating margins. First, our growth will bring scale benefits as we leverage a fixed cost base. Then, we will see the benefit of our operating excellence, the day-to-day trading focus on optimizing results that JD has delivered over the years. In addition to that, there are some major areas that give us confidence we can see further efficiencies coming through in time. First, supply chain and back-office synergies in the US. We have plans to deliver the $25 million we announced on acquiring Hibbert, and we're looking to deliver more. The benefits will start to flow from this year and grow thereafter. Then we have supply chain and platform benefits. As our new DCs come online and we roll out our new digital platforms over the next two years, we're able to remove the over 20 million pounds of double running costs that we have been incurring on this. And the move to full automation of the Hairland Distribution Center will also further reduce duties we pay on product imported from the UK into Europe. And with much of our investment in upgrading our governance and central systems and infrastructure now complete, we will start to leverage these to deliver overhead efficiencies. So turning to cash, JD is a highly cash generative business. Over the last three years, we have delivered IFRS 16 EBITDA of £5 billion. Taking into account lease payments, in old money, that's a cash EBITDA of over £1.2 billion a year. Now, after allowing for the investment in working capital, as we've grown the business, our increased capital expenditure and tax, we've delivered cumulative free cash flow of over £1 billion over the last three years. This cash flow generation, however, has been more than offset by the important investments we have made in buying out the minorities in ISRG in Iberia and MIG in Eastern Europe and acquiring Hibbert and Korea. With this significant M&A investment behind us and more targeted capital expenditure, we will see our cash generation improve. As I just mentioned, we have stepped up our capital expenditure over the last three years, investing over £500 million alone in the last two years, as we capitalised on growth opportunities across the group and invested to ensure our supply chain was fit for purpose for a group of our size. With the peak spend on our supply chain behind us and more targeted store capex, we will see capex trending to around 3% to 3.5% of revenue. The majority of our spend, around two-thirds, will be on store growth as we capitalise on the growth opportunity in North America and Europe, with a lower share on supply chain than we have seen, and the balance on ongoing central and systems projects. In terms of detail, we'll provide guidance on store openings on a yearly basis, and we have shared our expectations for the current year in our trading update today. Our spend over the last couple of years has seen investment across a number of areas. Firstly, necessary investment in core infrastructure, where the priority has been stability and risk avoidance. Secondly, investment in supply chain, where returns will start to come through as the new distribution centers come online. And then finally, our significant investment in stores, which I'll turn now to. We've seen good returns on our store investments. Looking here at Europe, we've opened 144 new stores across JD Europe in the last two years, and these are delivering an average return on investment of 37% on average capex of 700k per store. We've also undertaken 28 conversions in Spain, Portugal and Eastern Europe. These have typically delivered a 72% sales uplift and 32% return on investment on 500k per store. This is within our three year payback criteria. And turning to the US, you see a similar picture. We've delivered returns in line with our three-year payback criteria across new openings, conversions, and relocations and expansions. New store openings have led the way in terms of returns. We've also seen good uplifts and returns in conversions and relocations, underpinning our ongoing program of new store openings and conversions. And we've seen similar returns elsewhere across the group. Now the store returns I've just been focusing on have been JD. Our portfolio of fascia across the group operate with different metrics, but similar returns. Here you can see how our US fascia economics are differentiated, allowing us to vary our proposition to match different markets across the country. From the mass market, high footfall locations we're targeting with JD, where the higher revenue supports the higher investment, to Hibbert. which has a store economic concept which works well for the underserved markets it operates in. Shoe Palace and DTLR's store economic model fits well with their community focus in higher population urban areas. This differentiation across our fascias positions us well to optimize our returns across the range of different markets we serve in the US. As an operationally geared business, like any retail company, it's important to maintain a strong balance sheet. Notwithstanding our increased capital expenditure and recent significant M&A investment, we've ended FY25 with net cash on an IS17 basis. And on an IFRS16 basis, including leases, we had net debt to EBITDA of around two times. Our strong cash generation will continue to underpin this strong balance sheet position and provides headroom for investments and commitments such as the Genesis option. Before we move on, it's worth a couple of minutes on the Genesis option. The Genesis put and call option is over the 20% of our North American business that we do not own. As Regis mentioned earlier, we've agreed with our partners to defer the exercise window. Under the previous arrangement, that 20% could be put or called in four 5% tranches from FY25 to FY28. Under the revised arrangements, the 20% can be put or called into 10% tranches with payments falling in FY30 and FY31. Other than these changes, all other terms remain unchanged, including the cap of £1.5 billion. As we adapt our plans, we've updated our capital allocation priorities. With the underpin of a strong balance sheet, the priority for our cash will be investing in the business on an organic basis, funding working capital and capital expenditure, with the majority of our investment focused on the key growth opportunities of North America and Europe. Secondly, we need to maintain headroom to fund our commitments. The material commitment is the genesis option, and with that deferred, we now have significant liquidity headroom in the short term. Thirdly, we will continue with a progressive ordinary dividend. After this, with our surplus cash, we can invest in further M&A or increased investment that improves our return on capital, and or we can return cash to our shareholders. Reflecting our strong cash generation and with no material M&A in the pipeline as we bed in and generate value from our recent acquisitions, we are now in a position to return cash to shareholders and have announced an intention to launch an initial 100 million share buyback program. So I'd like to close my section with a summary of our investment case, following the update to our medium-term strategic plan. Let's start with the fact that we operate in a scale and growing market, growing less quickly than we have seen, but supported by ongoing casualization and activity trends. Within this market, we are positioned to grow our share as we generate organic growth ahead of the market. Why will we achieve this? We're a leading player in scale markets. We have headroom to grow in North America and Europe. We are a key partner for the main global and regional brands, and we have a high level of brand love across all our features. Next, we have a strong and agile multi-brand model. We have strong store economics, we have wide-ranging brand relationships, and we have a proven ability to drive and respond to trends. Next, we have a customer-focused omnichannel model. We're improving the ease of our cross-channel offer across a number of customer touchpoints, all supported by a strengthening customer loyalty proposition. Then we come to JD's operational excellence, which has been clearly demonstrated over a number of years. This puts us in a great position to leverage our well-invested infrastructure as we continue strengthening our governance and controls environment to deliver profit growth ahead of sales over the medium term. And finally, this improving profitability and more targeted capex underpins strong cash generation and a strong balance sheet. And with disciplined capital allocation, we will invest in growth while delivering returns to shareholders. So bringing it all together, we are well positioned to deliver growth. Our operational excellence will drive improved profit and cash flow over the medium term. We are committed to delivering strong shareholder returns. As a demonstration of that, we intend to launch an initial 100 million buyback program. So thank you for listening to that. I'll now hand over to Regis who will chair the Q&A.

So let's move to Q&A. Just before we move to Q&A, because I know that you would like to ask us about tariff. So we are digesting tariff. We are looking at it. It's a very serious matter. We are working on it. But as you have seen, the position is likely to evolve. It's volatile. So we don't want to be hypothetical.

Hypothetical.

Hypothetical. It's the same word in French, but not the same pronunciation. So we love to be more helpful, but anything we say no will be misleading or could be misleading. So just to prepare you, so we're not going to answer any question on tariffs, so just to prepare you on the Q&A. But we are welcoming all your questions on our strategy and our midterm plan. And if you can give your name first and your company.

Afternoon, Jonathan Pritchard at Appeal Hunt. Just on brand awareness in the States, I think it's probably a little below where you'd hoped it would be by now. Can you explain why that hasn't quite lived up to your expectations and how the next tranche of stores is going to help thrust that forward? Another couple of quickies on progress. Firstly, States, as you talked about, 10 million customers on there. What are you doing in terms of personalization of contact with those customers and how far developed is that process? And then similarly on career, obviously some best practice switch change over there, sharing a best practice. How is that going in terms of their formats, perhaps educating JD a little bit?

Yeah, so Michael, if you can take the first question, I will take the two others.

Yeah, of course. So we're actually seeing some really good brand awareness gains in the US. In the key markets that we measure where we are most active and we have the majority of the stores, which is New York and the I-95 corridor, Houston, Dallas, Miami, Los Angeles, we're up to about 50%. aided awareness, which is a massive increase year on year. So we're definitely headed in the right direction and we've got some more, you know, we're feeling pretty comfortable with the marketing strategy that we've got, which is very much focused on communities and we're going to look to expand that into some more markets as well as we go into next year. So we're actually making really good progress on that front. I will take the two others.

So status, I think that you're right. I think we just started the program. I think for the moment it's more on downloading and to be able to build the relationship with the consumer. We are really scratching on the surface. So there's plenty to go for, but for the moment our priority has been to build and to have enough customers downloading the app in order to get to the next phase of personalization. A lot to go for, not a lot to report on. On Korea, I think that they had a great year last year. I think that we see the benefit of having a different type of customer, and the integration is going well. So there is nothing really special to report on that one, but I think the team is very motivated and really happy to join the JD group. Okay, let's go. Yeah, so sorry, I'll just go around.

Cool. Thank you. Ashton here from Redburn. The first question's just for Dominic on the guidance range for FY26. Obviously, it does exclude tariffs, but could you give us some color on what you are assuming, maybe around cost inflation, synergies, the potential range of like-for-like

Good try, good try.

And also any guidance on maybe H1 versus H2. And then secondly, what are you seeing with Nike at the moment? Are you seeing any evidence of them being more disciplined around promos? Or are you seeing partners being more disciplined around promos? And then when you look into the future, when do you expect them to return to growth with you? And then I guess the third question, just on apparel, obviously you've made a lot of progress over the past few years. It seems like calendar 24 is a bit more challenging. Just any update on what you're seeing there at the moment?

Shall I start with the fucking list? Yes, please. Okay.

Michael will take Nike.

Nike, yes. So, when we look to the current year space growth, we expect to be around 4% in the coming year. We'll expect to get about 10% uplift from a full year of career and hibbert. We expect like to like to be negative. Now, if I look to where the market is, it's around one to minus 1%, 1.5% consensus. I think I'll come to consensus in a moment. That sort of range or a bit lower, I think, is likely to what we'll see. Cost inflation, a big drive of our cost inflation this year will actually just be a full year of Hibbert and career, and that'll bring about 12 to 14 percent uplift. Then there are a number of moving parts in our cost base this year. Clearly, we have uh just general inflation um in the uk we have national insurance national win and wage as we say in the release we've got some investment tech investment and these days it falls more into opex than into capex so you know all of those things will you know go down up to 50 million pounds but you know offsetting that we just work hard every day that's what we get paid for unfortunately as well as driving the business forward but equally we will start to see some of the benefits of the us synergies coming through this year We've made good progress on supply chain in the sort of transport area. So a good example, bring five businesses together, you put five contracts together with the DHLs and UPSs of this world, and you get a significant saving. That's a nice quick one. Multifacial will take longer. So some of those things are already starting to come through. And some of the savings around double running costs and the European supply chain will be back-ended in the year. So puts and takes, but we probably won't see all the benefits of that this year. It won't fully offset the cost increases, but we'll start to move in the right direction for the next year. And just to complete the picture, coming to consensus, it's around 9.20 we say in the release today. It's a range of 8.78 to 9.83. There are two, three at the top end who haven't updated for a while. So I think naturally you'll see that coming down overall. We're sort of comfortable with that sort of, I'd say, range that's not at the top end just because I think they just haven't updated yet.

Okay. Nike, I think it started with pricing, I think. I mean, clearly Elliot's been pretty vocal about where he sees the Nike business headed. You see the DTC business really creating the halo effect for the brand, which gives it a premium position, and we're very much early into... Elliot's tenure in the business and we've no reason to suggest doing anything differently from what Elliot suggested. As far as getting back to growth I mean it's obviously a very different picture globally across the business because lots of different markets were at different phases of maturity with those kind of three big franchises that we just mentioned but I think generally we feel really good about the direction the brand's headed. We're seeing green shoots in the men's business in Europe particularly, which is really encouraging. We're working really closely with those guys to get it back on track in every market that we operate in. We feel really good about the relationship, the partnership that we have with Nike. I'm pretty sure we can get it back full speed pretty quickly, really.

Yeah. Thank you. Richard Chamberlain, RBC. Just three for me, if that's all right. It looks like you guys had a pretty strong January by the looks of it, and I just wonder what drove that. Was that sort of more on the Europe side? Or was that driven by sort of promo markets like US, France, Spain, and so on? And then what's your sort of planning assumption on pricing for the coming year? I mean, sort of pre-tariff or what would it have been up until sort of last week? I'd be interested on that. And we're in that sort of low single-digit. market growth that you're looking for, very low single digit. To what extent is that driven by price? And then finally, maybe Reyes, you can say what still needs to be done on the Europe side in terms of warehousing and further benefits to come through there. Thank you. You take January?

I'll take January. In terms of January, I wouldn't read too much into that. When we do our peak trading, we're taking raw sales data for November, December. We haven't got all of the sort of final adjustments around delivery and everything else. So January does reflect a bit of that for the whole quarter. And January is a sales period, and sometimes you might have a bit more sales, a bit less sales, and that's the way it goes through. So I wouldn't read too much into that.

Pricing might go up. I mean, our pricing strategy doesn't change. We want to get as much for the product as we possibly can. I don't really think we can say too much other than that for obvious reasons. But our strategy doesn't change. We're certainly not going to chase a web business that's highly promotional right now at the expense of margin. That's not what we've been doing, clearly. You can see that, and we don't intend to pivot from that at all.

And I think just to pick up part of your question there, Richard, you talked about 2% to 3% growth. That's over the medium term. And I think in retail, you have high years and lower years as the product is stronger or weaker, customer demand is stronger or weaker. I think this year, for a whole host of reasons, we're seeing as being more subdued on that trajectory rather than positive.

On Europe warehousing, so we have opened Erlen now 18 months ago, operating on a manual basis where we face issue has been the automation, we have changed the team, we are bringing expertise from out of the group with Veeam and with some people that we have in our Spanish warehouse which is using exactly the same solution. So we are on track now. Our plan is to start using automation during summer in order to ramp up before the peak period. We could have done that last year but it was at the time of peak and we said don't take a risk. you will appreciate the way we have looked at it we could have been more risky and take some risk we have taken no risk but we have the double running cost for longer which i think is the right way to do so that's where we are but we feel confident we have the right team the plan to start to ramp up and to start to use automation that will increase the capacity will help us to close the other warehouse that we are temporarily using. That should close at the beginning of 2026 and we start to have a full operation on a B2B place and we move our B2C after that for next year. So the full benefit of Berlin will be in 2027 but we'll get the B2B benefit in 2026.

Hi, David Hughes from SureCap. So three questions from me as well, please. First of all, in the US, how much progress slash success have you had in bringing some of your other really strong brands over there to perhaps kind of reduce how much of the sales there is so tied to Nike? Secondly, I call it tariff adjacent. In your full year 24 results, it looked like around 60% by revenue of products were sourced from China. Would you say the mix is currently similar or has any of that shifted out to Vietnam and other countries in the last year? And then finally, on the return of excess cash, do you have a threshold in terms of a preference for share buybacks versus special dividends? Thank you.

Michael, you're happy to take the first one?

Yeah, I mean, the brand mix in the US, particularly on Apollo, we've seen some great success with the own brands. and the licensed brands, and we'll continue to grow on that. We launched another one actually just recently, Unlike Humans, which is one we've developed in-house, and it's got off to a flying start. So we'll continue to do that wherever the opportunities allow us. It's not, as always, like we just said, we'll react to the consumer demand and where the consumers are going, so it's not like we have a directive to build an own-brand business in the US. That's not what it is. We'll always go with where the consumers go, and if the own brands can... fill that consumer need, then that's where we'll play.

Second one was on China. So I think China represents a very small part of our sourcing and a small part for the industry because most of what is produced in China is for China. So most of what is used out of China is produced not in China. So our exposure to China is very minimum.

And on the return of cash, we haven't set a threshold. We're just starting the initial buyback program now. In many ways, it reflects, when we talk to shareholders, their preference. So we'll update on that in due course as things evolve.

But it was a strong message from our shareholders. So we show that we are listening to them and want to please them.

Hi, from back of America. Two questions for me. First, you mentioned liquidity headroom, right? So going back to net cash position more visibly. Can you give us a sort of level or threshold or parameter where you think that you'll be comfortable to face Genesis or any other opportunity and you think would be a minimum? And secondly, if I'm not mistaken, January was more or less low single-digit positive. In terms of like for like, you expect the whole year to be down 1% to 2%. Can you tell us, since the beginning of the year, what you've seen? Has it been deteriorating or further improving? Thank you.

So dealing with the second question first, we'll update on our Q1 trading portfolio results on May the 21st. And I think, as with all quarters, particularly this year, we've got Easter moving from March to April, and we've got Eid moving from April to March. So that does create... a change in the phasing through the period. So we'll update on the full quarter at the full results. On liquidity headroom, what's important to us is maintaining a strong balance sheet. We haven't set a leverage target, but broadly speaking, that's around two times the least adjusted EBITDA. And when we do that and the numbers I put up there, we do include the genesis option liability. we can see that two times may be slightly elevated above two times, maybe slightly below. But in terms of setting our capital allocation, we are always mindful of that liability over the future term. So it creates a cash liquidity headroom, but we're not thinking about it in terms of leverage headroom at this point in time.

And Genesis, how is it valued?

Genesis is valued as 6.5 times the EBITDA in the relevant period, less net debt.

Which could be a nice indication for our shareholders to value the same for us. That's right. It's a good benchmark.

Hi there, Alison Lago from Deutsche Neumis. So three for me as well, if that's okay, please. First on the capex, so 70% going towards Europe and the US. Could you help us a little bit with the split between those markets in that and how maybe it split down sort of last year? Should we be assuming a sort of similar kind of cash run rate going into the US from here? Second one just on Omnichannel. So the slide you put up suggested it's really the online business that you feel like has not been performing. I guess interested in terms of what your expectations were and now what they are going forward and kind of what you're really doing to sort of drive that and change that going forward. And then finally, just one on Hibbit. So just interested in terms of if you could update how sort of their full year 25 revenue may be compared to full year 24 revenue in terms of the performance there and whether that consumer is at all more exposed to kind of recession, economic pressures, those sorts of things. Thank you.

I'll do the omnichannel first.

I think that the way we put on the slide is that our like for like has been higher in stores than it has been online. And I think we assume the same because we believe that today there is no reason to have an increased penetration or decreased penetration in terms of our online business. So it has been more challenging online. because of the fact that it is more promotional and we have stopped, we get out of the drug of doing promotion, so we have reduced the level of promotion significantly to have more and more the same policy online and offline, so we don't have any more different promotion online and offline and that has driven a little bit of sales. going down, but at the same moment our profit has gone where we want to be, which is something where we make as much money online and offline. So that's really what's happened online. So yes, it has been going down, but at the same moment I think we are on track with what we want to do. In terms of the way we look at it in an omniscient way, we have taken a lot of costs out. Some of the costs are marketing costs which are driving some sales which you are not interested in because at the end it's not profitable, especially in Europe because we have not yet the supply chain that we want to have. That's where we are, but I think that the way you should look at it is one business, and the fact that consumers buy online or offline doesn't really matter, and we want to make sure that the same in terms of our economy, it doesn't matter between both businesses.

Turning to CapEx, it's broadly 50-50. I mean, it might be a little bit more, a little bit less between US and Europe as we look forward. In terms of number of, you know, the opportunities there, they're broadly similar. I think if we go back to FY25, and Alison, I don't have the exact numbers in my head, but I think we've probably seen more elevated investment in Europe just because of the cost of the Helen Distribution Centre over and above the store opening. We have been spending on distribution centres in the US, but they've been costing us a lot less than the Dutch one. So I think it's probably slightly more balanced and probably more skewed to Europe in the last year, but we can confirm that. On the HIPAA revenue position, I think we're sort of seeing consistent revenue from last year in terms of pre-acquisition and where we are and the run rate. It's about $1.2 billion business. I think the thing about, you talked about that customer being under pressure, I think, is what you said?

No, the question was to say, is the EBIT customer more under pressure?

No, no, I don't think so. And I think one of the things to bear in mind about Hibbert is it serves underserved communities. So actually, it's often the only place in the community where you can get the products that we sell. And therefore, that in some ways underpins the demand. relative to the higher population areas where there's more competition. It's a positive and negative, so it's relatively consistent.

And don't forget in EBIT, you had in the past EBIT and CityGear, so you will see the difference between the two businesses. So EBIT will continue as EBIT, but CityGear will be transformed as DTLR and ShoePalace. That's a good point.

It's about a billion for Hibbert and about 200 million for CityGear.

Your modelling is important.

Dan Critchlow from Berenberg. Two questions from me, please. First, if you could talk a bit about the male-female split in JD, whether it varies by geography and whether you see an opportunity to maybe attract more female customers. And then secondly, if you could talk a bit, just for background information, really, about price elasticity and what you've seen in the past, and again, by product category and by country, if it varies. Thank you.

Yeah, so on price elasticity, it depends on the cycle and the product and all that stuff, so there is no answer to that. So I see where you're coming from and what you're getting, but frankly there is no answer. If the product is hot, there is no price elasticity. If the product is not hot, there is price elasticity. So it depends on the cycle and all that stuff. So it's very difficult to give you a number, which I'm sure you would like to have, but there is no number around it. on male, female?

Yeah, I can answer that. I think our mix in the majority of markets is pretty similar, actually. It's around 20%. I think as an industry it's generally going to be male dominated because of the nature of the product and the nature of sports marketing. We invest a lot in big space in key malls so we can offer a much better experience for her and that works really well for us. We can see we're able to capture more of that market that's out there but I think By and large, there's so many other things you can spend the money on. Trainers aren't always top of the list, so I think we've got to be realistic. There's probably a glass ceiling there for us as well.

And I think it's important that we stay on our format. And that's why we get challenged by the brand a lot around the female customer. And our answer was more to say, let's have a different concept to address the female customer, more than doing a lesser good job than we do today for key customers that we have in JD. I think that's the way we look at it.

Hi, it's Richard Taylor from Barclays. Just a question on the operating margin. I tried to write down on Dominic's slide all the numbers and times them together, so it might be wrong, but it looked like it was just under 8% on the operating margin. So can I just check whether that's right or not, because I know there's potential for rounding error there. And also, is that the operating margin that you reported last year at 9.3? I know you said it was post-leases, so I was just trying to make sure what the number was and what you were leading to in the median.

Yes, so we're evolving that because I think, if I'm honest, we've been varied in the operating margins that we have taken. So I think when we look at the business, an IFRS 16, if I'm honest, doesn't help in understanding the underlying profitability of a business, but there's accounting for you. So what we're looking at is operating profit and including lease interest. That's old IS17 operating profit. The number of 8% is broadly well finished this year, including that. The numbers up there are pro forma for a full year of Hibbert. So that does slightly lower operating margin than the rest of the group.

So you'd finish this year around 8% on that basis? Sorry? This year the margin on that basis would be 8%, is that what you just said? 8% to 9%, that sort of magnitude, yes. 8% or 9%. 8 to 9%. For FY26? Yeah. Okay. And just to be clear, that is the operating profit or the PBT?

Operating profit. So this is going back to the slide. So this is operating profit including lease interest. So I'm doing that illustratively to help you understand where we are today pro forma with Hibbert in terms of that operating profit margin where we see that over time.

So it excludes group financing charges?

It excludes group financing charges, yes. Got it. OK. Thank you.

That's Nick Barker from BNP Paribas. A couple of questions from mine. Firstly, it'd be great if you could touch on a bit about product and what products are selling well and what you're seeing in the innovation pipeline that you're excited about. And secondly, just touching wider then on your target demographic and given the increasing blend of fashion within your proposition and within sportswear in general, how much do you say a threat is a company like, say, Sheeran to your offering? Yeah, yeah.

I mean, I think demographically, the nature of our consumer and young people is trends are going to ebb and flow and brand appetite is going to shift a little bit within that as well. And the beauty of our business model is, you know, it is very adaptable, as we've said already. We're multi-brand, we're multi-categorised and we can pivot and adapt effectively. depending on where the consumer goes. We have a foot in performance, again, as Rajesh has illustrated earlier, and we have a foot in lifestyle and fashion right now. The marketplace is probably a little bit more edging towards the fashion side of things in certain markets, and we've adjusted accordingly. But as I say, we remain pretty agile in that respect. As far as product specifics are concerned, probably no surprises, Adidas New Balance. Our own business have been massively successful and there continues to be a momentum there. ASICS, again, probably no surprise, is in really good shape as a brand. So, yeah, there's still lots of energy and momentum in the marketplace. And obviously, looking towards 2026, we're going into a year with the biggest World Cup ever, which is really exciting for us.

Victoria Campion from Verone Capital. Three quick ones for me. So first, could you give us some examples of the kind of efficiencies that you might be able to get in the UK, whether it's kind of more automation or if there's anything you can do with rent renegotiation, any examples there? Then the second would be, could you remind us what percentage of products are exclusive? And maybe if there's any examples of you getting access to drops in advance, given your increased size and kind of share of the industry now? Then finally would be on the outdoor business. Is there any kind of potential for significant improvement in the short term there? Is there any chance of you reassessing you continue to own that business or any improvements you can give us in the medium term? Thank you.

I will do the outdoor. Michael, you do the exclusive product. And Dominique, you will do the efficiency. So outdoor, the good news is that outdoor is back to profitability for the years that we finish. So that's good news. I think we are... And we are working on the rationalization of the fascia. We have changed management, so we believe that we are in a good place in order to turn around the business and to deliver from the scale of this business. It's number one in the UK. It's a strong business. We need to do a better job to deliver the profitability that we are seeking for a business of that size and with this type of market share.

As far as the product drops and exclusivity, we're about 50% on apparel and about 30% on footwear. But what I would say is the exclusivity is really nice to have. It gives us a bit of protection. But the exclusivity by and large is driven through consumer insight and our appetite to deliver products that are consumer right. that aren't available in the collection so the brands you know will work with us collaboratively to deliver that kind of product because they they don't cater to it um so it's kind of a byproduct of our business model and our consumer connection and you know what's more important to us is the overall assortment and you know you can see behind you that we've just launched a new global brand platform forever forward which is something that we're really excited about and proud of and That's more important to us is about the brand overall and how we show up consistently and how we can create energy in the marketplace every single day and not just around individual drops. I think individual drops and high heat clearly are not particularly, they're great when you've got it but they're not great when you don't so it's more about consistency for us.

And on the UK efficiencies, I think it comes in a number of areas. On the store point you said about rent renegotiations, we do find that every time we renegotiate or extend the lease, we do better. So that's good. I think the other thing is just about the state as a whole. We've got the number of stores, probably the space that we want, but we can make that more productive, and often that might mean moving from four stores to three stores in an area, or upsizing a particular location area, which means we get more productivity out of a particular location. One of the things that Regis talked about earlier on was a new HRIS system that will aid and improve our store staff scheduling. It's not necessarily about fewer people, it's just about better timing in the stores when they're there and therefore that's more efficient. Then if you move back from there as we do more things like ship from store with our omnichannel offer, that means we can be more efficient in the back office supply chain. So those are some of the areas there. And then we go back to the back office and the head office. We've been investing a lot in the last couple of years in addressing some of the things that Regis talked about. And as we go through that, come out of the back of that period, we haven't quite finished it yet, but a lot of it's done. We'll start to be able to see some head office efficiencies coming on the back of that. So it's like there are no big single items that will change it, but it's just lots of things that we just need to work hard on and do work hard on every day.

If there is no other question, I think that I would like to thank you to come. I think we have a full room today and I wish you a great day and see you soon. Thank you very much. Thank you.