Why I think JD Sports’ 800% share price growth makes it an undisputed king of retail

Jabran Khan delves deeper into the growth of JD Sports Fashion amongst the so-called retail crisis.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It seems a day cannot pass without a breaking news story of a well-known high-street retailer steeped in tradition and a mainstay of the British high street now on the brink of collapse and scrambling for rescue deals and bailouts. 

Mothercare, Toys R Us, Maplin, Poundworld to name a few, these have all fallen foul of the recent changing of the guard as shoppers flock for their plethora of digital devices and shop from the comfort of their own homes rather than brave the high street. Somebody should let JD Sports Fashion (LSE: JD) know what’s happening out there because it is very much bucking the trend.

Increasing costs & change of spending habits

Research indicates the top 150 UK retailers have 20% more store space than they need and can afford. Some shops such as Homebase, Mothercare, Carpetright and New Look have done restructuring deals with their landlords, closing hundreds of shops between them.

Companies have had to deal with rising costs: researchers at A&M and Retail Economics suggest that during the past five years, companies have had to spend 10.8% more on things such as business rates, increasing wages and rents. And, at the same time, retailers are trying to adapt to rapidly changing shopping habits. Consumers now spend one in every five pounds online – and if businesses are seeing 20% fewer sales on the shop floor as well as their fixed costs rising, then profit margins will be squeezed.

Consumers are still shopping, of course. But even with the rise of online platforms, shops need people to walk through the door.

Humble beginnings & a meteoric rise

A sole store opened in 1981 in the former mill town of Bury. Fast forward 38 years, and there are 2,400 stores in 19 countries, numerous acquisitions (which means JD Group now boasts a portfolio of sport, outdoor and fashion amongst its offerings), not to mention a recent foray into the gym market. In 2019 JD Sports was impressively promoted to the FTSE 100 list of largest businesses in the UK.

JD Sports: a growth phenomenon

In the last five years, JD Sports has seen an astounding 800% increase in its share prices, which on the surface of things is quite remarkable. If you take into account revenue and profit increasing year on year despite the acquisitions and forays into new markets, JD Sports’ moniker of “undisputed king of trainers” should probably be changed to “undisputed king of retail”.

No one is under the impression that the next five years will mean another 800% increase in share prices as well as further expansion into new markets, but the company must be applauded for its savvy and methodical rise atop a retail minefield.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »