JD sports SWOT Analysis and their Competitors

JD Sports SWOT Analysis & Competitors

In this article, we will see the JD Sports SWOT Analysis and their competitors

Introduction

Original Bury store founded 1981, and later an Arndale Centre tenant, trading from eight sites in the North West. JD Sports was set up by John Wardle and David Makin, originally operating from a single shop in Bury, Greater Manchester in 1981. 

It is currently trading from an 865,000 square foot (80,600 m2) site with ten times the floor space of Zara in Wales. JD Sports had net debt of £40 million in 2006 and this increased to £100 million in 2007. 

In July 2007, the company made an unsuccessful takeover bid for Bob’s Stores and attempted to purchase Barnsley-based indoor market and discount fashion retailer TK Maxx. In August 2008, the company acquired a group of 165 stores from the administrators of First Sport.

JD sports fashion offerings

JD Sports Fashion is one of the largest sports fashion retailers in the world and the biggest listed retailer in the UK. Their range of exclusive merchandise and clothing reflects its strong heritage, quality, and creative spirit. 

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JD Sports offers a broad range of sportswear, leisurewear, and fashion apparel including official sports, fashion, leisure, and accessories. JD Sports has more than 950 stores throughout the UK and 627 stores in 26 European countries. 

JD has six outlets and 14 franchise stores in the U.S. JD Sports has a growing online store in the UK, USA, Australia, and Ireland. In its 2018 first-half results, JD Sports announced: Retail EBITDA up 2.2% to £82.5 million and UK underlying profit was £54.8 million.

JD Sports competitors

JD Sports’s competitors include:

  1. Academy Sports + Outdoors- It is the largest sporting goods retailer in the United States with over 600 stores in over 30 states, mainly focusing on sporting goods for both men and women. The company generates around $1.9 billion in annual revenue and is a leader in the sporting goods industry. 
  1. Foot Locker- which operates stores across the world, has an annual revenue of $5.2 billion. Its four core brands – Foot Locker, Footaction, Lady Foot Locker, and Champs Sports are well-known for their exclusive products, which feature the latest in high-performance sporting gear. 
  1. Industry Players Kanui (a product of Scottish Limited Brands) is a global leader in the sportswear market, founded in 1977 in Edinburgh.

Strengths of JD Sports

JD Sports’ high strength lies in the fact that it provides a perfect shopping environment for sports lovers by selling sports apparel. JD Sports fashion’s strengths include the following: 

Responsible suppliers

The company has secured adequate suppliers, allowing for the uninterrupted supply of the most necessary needs to the company. This reduces the risks associated with the sourcing of raw materials and the presence of some unforeseen issues. 

Also, by acquiring other companies Jd Sports has been able to build a strong distribution network that allows for quick availability of the products in the market.

Automation of activities 

After many years of gradual growth, the company has been able to implement automation technologies that assist the company to operate more efficiently. One of the products, the garment chain, and its management system, was designed to reduce labor costs and increase productivity. 

Automation is a vital factor to increase efficiency, reduce labor costs and increase profit. JD Sports has been automated and automated to eliminate or minimize waste and wastage.

Powerful distribution network

At the end of March 2018, JD Sports had 952 mn square foot of distribution space across 78 countries. The company is a strong distributor in the US and a major wholesaler in the continent. In addition, JD Sports has 32 overseas subsidiaries to expand the distribution network. 

Furthermore, the company has dedicated management in place for each overseas entity to understand the local market and products, and then to distribute the products in different countries. For example, JD Sports America has a separate team to explore and develop business opportunities in America.

 Brand Portfolio

JD Sport is a leader in the sportswear market in the US, even if this particular market is competitive. Their successful blend of both premium and discount sportswear brands ensures that they can offer the best product at competitive prices.

 Their premium brands are known and trusted in the market and most of their customers are willing to pay a premium for the quality of their products. Their value for money segment makes up for a significant part of the company’s sales with over 70% of the business generated from this division. 

Most of their competitors’ products are of lower quality and value for money due to their lower prices. Their modern facilities allow the company to produce high-quality products of the highest standards at low cost.

Weaknesses of JD Sports

Weaknesses of JD Sports include:

  1. Importance of traditional brands: Jd Sports Plc sells only a few products under its new brand, which is understandable considering the large number of traditional brands that it has acquired over the past few years. 
  1. Low EBITDA margins: EBITDA margin for the first nine months of 2016 stood at 2.8% compared to 3.7% for the first nine months of 2015. 
  1. High credit risk: Jd Sports Plc’s credit profile is mainly based on the outstanding amounts that are being borrowed by Ecko Brand Groups Ltd and its brand assets. The high amount of credit risk increases the vulnerability to volatile raw material prices, which can negatively impact the company’s earnings. 
  1. Rising liquidity risk: Jd Sports Plc’s current ratio of 2.0 indicates that its ability to meet its short-term liabilities is not good.

Opportunities for Jd sport

To improve its online sales, Jd Sports Fashion Plc has improved its website and incorporated social media platforms such as Facebook, Instagram, and Twitter. By expanding its online stores, Jd Sports Fashion Plc has been able to increase the efficiency of its sales.

 One of the major benefits of these improvements is the accessibility of their products at any time of the day. As well as the improvements in their online sales, Jd Sports Fashion Plc has also innovated their products to include new designs and more varieties of products.

 For example, in the “Walking Tall” clothing range, they included different types of fabrics. Additionally, Jd Sports Fashion Plc has innovated its latest “Tourcoing” collection. Opportunities for Jd sport include:

Opportunities in E-Commerce for Jd Sports Fashion Plc.

In the current scenario, there has been an increase in the number of internet users all over the world. E-commerce and the internet are the two platforms that are used to deliver online shopping. The e-commerce industry is one of the fastest-growing industries all over the world.

 Various e-commerce companies have been growing rapidly and are constantly providing better products and services to their customers. Jd Sports Fashion Plc is one of the best e-commerce companies in the world and is known for its highly innovative products. 

As far as the beauty industry is concerned, there has been an increase in the number of users all over the world. This is not limited to beauty products but is spread over all the sectors including electronics, cars, books, electronics, clothes, and others.

 Opportunities in marketing for Jd Sports Fashion Plc.

Jd sports Fashion Plc is an internet store which provides quality products. It also provides fast delivery services, price discounts, and free shipping. In such a manner, it saves on delivery costs which can be given to the customer. 

The objective of Jd Sports Fashion Plc is to offer a wide range of products and services to the customers in the most economical manner. In addition, the internet is an essential part of the globalized world and creates a strong ecosystem. 

JD Sports Fashion Plc online store was created to provide the customers with the opportunity to buy quality products and services at discounted prices.

Technological developments in the world and opportunities for Jd Sports Fashion Plc.

Technology is progressing rapidly and there are technological developments daily. Here are a few recent technological developments that are becoming more relevant and important: BaaS (BaaS infrastructure as a service). 

This is a system of using cloud and infrastructure as a service for the e-commerce industry, primarily for mobile devices. These developments may apply to Jd Sports Fashion Plc. as well. Furthermore, the company is investing in such technologies as mobile applications, cloud storage, analytics, and mobile payments. 

Security and privacy in the context of e-commerce. With the rise of smartphone usage, security and privacy have become important issues for some e-commerce companies. By acquiring companies such as iQmetrix, Jd Sports Fashion Plc.

Population development and opportunities for Jd Sports Fashion Plc.

According to the United Nations (2016), the population in the world is expected to reach 8.6 billion by 2050, and by 2100 it is expected to reach 9.8 billion. With the increase in population, the amount of people with purchasing power is also increasing.

 There are more people with purchasing power, which helps businesses in the fashion industry to have an increase in sales. However, the market with the buying power remains narrow. With the population and the market is limited, there are opportunities for all businesses to expand their reach.

 Manufacture and production of sportswear. This will help in the distribution and selling of the product. Online distribution of the product.

Threats for Jd sport

Threats for Jd sport include:

Lack of skilled workforce 

JD Sports Fashion Plc is currently facing the threat of a shortage of skilled workforce in those markets, which makes their plans of scaling up and expanding their business to other markets difficult. The company has to rely on the local talent pools to be able to scale up in those markets. 

Lack of a skilled workforce would mean a limited expansion of these markets for Jd Sports Fashion Plc in the long run. The company’s strategy to develop and grow its business through leveraging its brand strength has made it very difficult for Jd Sports Fashion Plc to shift its focus to the next growth wave, which is manufacturing many great products that can get their clientele to love their products.

Revenues or profit margins

One should not expect Jd Sports Fashion Plc to be posting huge increases in the revenues or profit margins for the next several years as their products are not portable and for the same products can be obtained at any sporting goods store within a short distance. 

This factor can be a threat to revenue and profit growth. The company has become a small-cap stock with a market capitalization of approximately $700 million. Jd Sports Fashion Plc had generated quarterly sales of $695.86 million in FY2016. A strong performance in the year is attributable to product innovation.

Intense competition

Among the various international sporting goods stores, JD Sports Fashion Plc sells its products under different brands, including Nike, Adidas, and Puma. The company acquired these brands from Oakley in 2015 and C&A in 2016. 

It has extremely strong pricing power in these markets. The brand name and the reputation of the company allow the company to protect its margins. In addition to having a major market share in some of the most lucrative product categories, these brands also carry some minor brand value, which may work in the company’s favor. 

According to a report, Adidas is likely to generate about 1.2x more revenue from North America, Europe, and Australia this year as compared to 2016. They are also the leading sports apparel and sports footwear manufacturer in those markets.

Growth rate

Our data shows that JD Sports has good prospects as a solid buy for the long term. The company has a very impressive growth rate and has a price-to-earnings (P/E) ratio of just 14.65, making it very cheap. 

At the same time, its forward P/E of just 13.37 indicates that the share price has some way to run. Having said that, this does not mean that you should rush out and buy the share today. What it does mean, however, is that buying JD Sports now can give you a good chance of enjoying rapid growth in your wealth in the years to come.

 As an investor, you are in a position where you can be patient and not make any rash decisions just because the share price of the company is trading at a low level.

Conclusion

UK households have been reluctant to spend heavily on clothing in recent years, but that is expected to change as the consumer economy continues to improve. An article on BBC News has pointed out that fashion sales have the largest profit margins in retail. 

Based on the right numbers and location, JD Sports is well-positioned to take advantage of an upturn in the UK apparel sector. The company pays a solid dividend and has no long-term debt. Given the good times the company is experiencing, I believe JD Sports should be a solid holding for any investor looking to diversify their portfolio.

Frequently asked questions

Question 1.) Who are the competitors of JD Sports?

Answer- Some of JD Sports’s competitors are Academy Sports + Outdoors, Foot Locker, Kanui, etc.

Question 2.) What are the strengths of JD Sports?

Answer- JD Sports high strength lies in the fact that it provides a perfect shopping environment for sports lovers by selling sports apparel.

Question 3.) Who is the owner of JD Sports?

Answer- Pentland Group has 55 percent shares of the company and others are Fidelity Management, Aberforth Partners, etc.

Question 4.) Who is the founder of JD Sports?

Answer- John Wardle and David Makin.

JD sports SWOT Analysis and their Competitors

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