JD Sports Fashion Plc (JD) Earnings Call Transcript & Summary

Well, good afternoon. We'll be testing you on that later. My name is Andrew Higginson, I'm the Chair of JD Sports and delighted to welcome you here this afternoon to our Capital Markets Day. I joined in July last year. And whilst there are many people who have a claim to the title, my kids are ecstatic that I am the King of Trainers. Anyway, the objective today is for you to hear from our new CEO and from the senior team here, they're all here, and we're excited about the prospects ahead for the business over the next few years. The opportunity, of course, is one thing, delivering it as another. So there's no certainty, of course, and you'll have to judge the probability of the team delivering that growth over time as you get to know them. The business has achieved a remarkable growth over the last 20 years, and the Board are very fortunate to have inherited the current position from the previous team, led by Peter Cowgill, of course, and Neil Greenhalgh is here today and others. But most of the key players from that team are, of course, still here, and they are the cornerstone of the new team. And we're blessed with a very strong cadre of senior leaders, and I look forward to you getting to know them over time. The changes at the top with Peter leaving, Regis and I joining were rooted in a governance deficit within the firm. And today isn't about that. But I should say that we are well on with a program of reforming and strengthening our governance framework. Some things of those will be very visible to you. Obviously, we now have separated the role of Chair and Chief Executive. The developers had approved -- sorry, we developed and have approved a new rent policy. It's much more equity based as you follows best practice. Regis' vision has brought forward a revamp of the strategy, which you're going to hear more of in a minute. But it's brought clarity, I think, and some focus. And you've obviously seen the announcement around the disposal of our numerous small fashion businesses which is part of that strategic rethink and reset that he's leading. We've also had a big program internally of formalizing controls. And we're going to strengthen the Board with more Plc experience coming on in the form of non-exec as well to complement the very strong team we already have. That's all in hand with the -- and we'll help with the foundations for growth that Regis is going to now outline for you. As I say, all of that governance of is not for today, but I want you to be reassured that we are on with that as well. And it would be remiss of me not to mention it. So that's it for me. We're going to hand over to Regis now who will take you through the business side of things and the opportunities ahead. Regis?

Thank you. Thank you, Andy, and thank you for the Board for giving me the opportunity to lead JD. I think it's a fantastic business. I spent the first 6 months to try to understand the business and really spending time to understand this GBP 10 billion, GBP 1 billion profit business 3,500 stores in the world, 1/3 in U.K., 1/3 in U.S., 13% in Europe. It's a business where we are successful and profitable in Europe, in Spain, in France, in Italy, in Germany, profitable and successful in U.S. with 3 brands, Finish Line and JD with Shoe Palace and with [indiscernible] successful in Australia. And I think that we have the guy that is running Australia for us. This is a business that was -- we started from scratch 5 years ago, and now we are #1 of the market. So it gives you the strength and the power of the brand and how we -- what we have achieved in the last time. I think that I spent 6 months to listen to learn from the people from the business. and there is incredible people in the business. And this is one of the strongest part of the business. You have people who have started with us 25, 30 years ago in our store in Bury and now Group HR Director. And she's looked much longer than that, but people who start as a sales assistant is now a group buying director. People start as a sell assistant as a group retail director. This gives us the understanding of the business, the understanding of our customers, the understanding of the product that no one else can touch on this one. And I think this is a great future and a great asset. At the same time, over the time, we bought some business. And I met -- I never met so many entrepreneurs in this group because we bought so many business with so many entrepreneurs. People who are managing the business with passion and managing those business like it was their business. And I think that's another great asset of the group. I spent the last 6 months to meet our partner, our brand partner, Nike, almost every 2 weeks, Adidas, VL Group, Salomon, Hugo Boss, new balance, plenty of opportunity to ask them what they think about us, what we are doing well, what we're not doing so well. how they see the market, how are they seeing the market evolving, what is the strategy, what is their objective. And I spent this time to interact with them, play sport lucky to play this to paddle to play football, to run, to swim with them. So that's part of our industry. So it has spent the last 6 months having fun having challenge enjoying happiness and finding and meeting incredible people, an incredible story. But today, it's my time to come back to you and to come back with what I discover or how I see the things coming, which is the starting point is today is a day to come back to you with our vision as a group, as a senior leadership team, where we want to bring the business what we want to achieve in the coming 5 years. It's the time to go through how we make it possible. And I think that for that, you will see Nigel coming and explaining how we're going to open the number of stores that we put in the plan. We will see Mike coming and explain to you how we're going to buy the product that will fuel our growth. And you will see Sherilyn coming and to explain how we're going to operate in order to make sure that all those things come together and finish in the customer hands. And you will have Neil explained in the part that you are not interested at all, which is the financial. So we just put that at the end because I know that's not your interest at all. So that's about today. So where we start? The first thing is let's look at the markets. We operate in the best part of the market. We are a sports fashion retailer who are selling athletic leisure. And if you look at the spot market, athletic leisure is what is driving the growth and driving the profitability. If you look at fashion, the same athletic leisure is what is driving the growth and the profitability. The growth in our market in the athletic leisure is 3 to 4 -- 3 to 4 points more than the rest of the sporting goods than the rest of the fashion. That's where we operate. That's a market we are addressing. And you can see plus 6% in the last 5 years, plus 8% for the coming 5 years. This is the type of growth that we are looking at in terms of the athletic leisure market. Second key part is why it is growing so fast. It's because casual is becoming the new formal and athletic leisure is a new casual. And that is what is benefiting us. It starts with sneakers. And it's incredible, you walk in the street and formal shoes has disappeared. It's 10 years ago, that was completely different. We're still wearing for shoes. And I was the day I stopped. I will never go back. And I think that the same which is happening with our customer. It's such a nightmare to have formal shoes compared to sneaker that you don't go back. And I think that you all experience that. So the first thing that what happened to the footwear and it's happening to apparel, too. So with COVID has been an acceleration, people discovering that it was much cooler to work with a T-shirt than to work with a shirt. You don't have to hire the shirt, so you get time in the molding and you feel better. So that's what happened in the market. And I was a franchisee of Hugo Boss, Sandro Maj of Ted Baker or Guess. And #1 selling line for Hugo Boss, not a suite. It's the hoodies. It's a product that we are selling. It's a material that we are using in athletic leisure promote part. So that's what's happening in the market. And all of that is coming to us because we are the reference. We were there the first, the one that has opened this market. The last part is our customer. Our customer target is a young the young, the teenager. And contrary to what people was having a fear around that, they have more money today than they have a harder because they have a job Three years ago, finding a job in a restaurant, planning a job in a retail, not possible. It was closed. Now you go to a restaurant, it's difficult. I think it's difficult to be served. And if you are served, well, we are looking for people. That's what's happening. And it's happening in U.S., in U.K., in Europe, everywhere. And that is very good for our customer base because that's the job they will start with. That's the job they will get a pocket money to buy our product. And yes, inflation, but inflation mainly what energy. They don't pay the bill at home and mortgage. They don't pay the bill at home either. So they will benefit from the situation. So not only we are in the most attractive part of the market, not only our customer have more money than ever but at the same moment, the brand is loved. And this is something where when I joined the business, I have to have a sort of low index on NPS. So this is a like net that has been calculated. And I was expecting a big love index in U.K. because that's where we were born. That's where is where we start. And in fact, you can see we have the same love index almost all over the country. all over the country we operate. So U.K., U.S., Europe, France, Italy, Germany. Our love index is 2x 1 of our peers, so to our competitor. And that is in all countries we operate. And just that's for cultural things, the biggest gap is in France and Italy. So I'm very proud of that. I've done nothing about it, but I'm very proud of that. The other thing you can see is that France and Italian you love no one except themselves and JD. So the good thing that we are to an American, this is more cultural they love everyone or they present to love everyone, but they love JD more than the other. So that's all good news for us. So that's about love. But it's not only love with our customer. It's loved with our brand partner. And on this one, it's not a question of love. It's not a question of relationship. I think it's because we add value. Those big business, they're not talking unfortunately about love or about relationships. They talk about money and they talk about what you bring to them. And we bring something unique to them and 2 things which are really unique. The first thing is we are about lifestyle. All our brands are a sport brand that move to lifestyle, but they originate from sport. They cannot lose their roots. They cannot lose what they are, what they stand for, and they stand for sport. Even if lifestyle is a significant part of the business, certainly the most profitable and the fastest-growing part of the business. Sports is where they start. And more than words, an image will give it what is happening. If you enter a Nike store, and this is a Paris one, what you will find, man can running, in car running because that's where Nike start. You go to an Adidas story, what you will see, man can play in football because that's where they start or running. And you enter a JD store, no one is running except the staff and what is happening, the man is posing and that is lifestyle, and that is something unique. We are the lifestyle authenticator for those brands. Without us, they don't exist so much in lifestyle. They exist by the product, but not by the story. We create the story for them. And that is really important to understand. The other thing is that we are the only one lifestyle. If you take a major competitor, a U.S. competitor, yes, they pretend to, but they are more footwear. They don't have the apparel. And you can see on the man can what's creating the lifestyle impact is a full look is the fact that we do apparel and footwear. And that is what is unique to us. And this is where our mix, which is 50-50, it just creates much more value for them. So first thing, we are about lifestyle, they're about to sport. The second one is our customer. Our customer is young, it's trendy, is urban, is multi-brand. When you are a teenager, the first thing is you just get rid of your mom to choose what you can wear. You're not going to go directly to a brand that will dictate your choice. You want to have the choice. You want to have the freedom. You want to be an environment that looks like you that give more chance to all the brands, to new brand, cool brands, you want some music. You want people who look like you. This is JD. This is not mike.hisis not adidas, and they recognize that. they are much broader than we are. But at the same moment, we do a job for them, which they cannot do. They cannot be multi-brand because they are monobrand. They can have to have store with different brands, new brands, cool brand, different brands. They need to be who they are. And who they are is not multi-brand. So I think we have really these 2 things, which creates this strong relationship, lifestyle versus sports multi-brand versus mono brand. And that is why we exist. This is why we get so much support from the brand, why we are the first partner in the world. And on top of that, I think our execution in store is much better than anyone else and so that means that we have the right to exist for them. And we do that globally because the other things the other problems that those brands are, they are global, and they want to have global partner. And usually, and especially in Europe, if you take sporting goods, they will have one partner by country. There is no global one. We are one of the few global retailer to offer them the ability to express a brand in a multiple country multiple environment. And it's really well keep secret in JD. People tend to look at us as a successful U.K. retailer. Yes, we are a successful U.K. retailer. But we are not only a U.K. successful retailer. We are a European successful retailer. We are a U.S. successful retailer. And there is not a lot of retailer. There is a lot of nice story in U.K. in terms of retailer going from scratch to 400 stores and just stop at that level. This is all the retailers we are not able to be out of the U.K. There is not -- there is a few that have been and we are one of those view. And you can see that in terms of number of stores, 400 stores in U.K., that 25 stores, if I put JD store in the Finish Line so in U.S., 445 stores in Europe and 95 stores in APAC. So you can see 1/3, 1/3, 1/3 and 10% on the rest. So that's already where we are. And if I put on top, our sporting goods sport and the other concept we have, it's 800-or-more year. And here, it's 400 more stores with Shoe Palace and DTLR. So you see how much international representing us. And at the same moment, which is great, we have plenty of potential in the U.S., in Europe, in APAC. So this is about the density. I can express in market share, as I said before, only 3 countries with more 10% market share. If I take a more or a more scientific way of looking at it, if I take number top inhabitant, if I take the U.K. and I just use U.S., I have the space for 4x more store in U.S., and this 4x is based on the in U.S. to get the same density of and store per inhabitants than we have in U.K. And that doesn't include the fact that the U.S. per capita is the U.K. per capita. So certainly, you can argue, it could be 8x. And if you take Europe, the same calculation gets to 5x more. And we know to cover France, you need 250 stores to cover Italy, Unit 200 stores and to cover Germany, you need 400 stores. To cover U.S. you need 800 stores. So this is where we are going. This is our opportunity. plenty of opportunity for us to grow. And we have a strong base. We delivered very strong results. This is the last 5 years growth, 5x the market average in terms of growth. More important, store productivity. You know, as I know, the best retailer are the one with a higher store productivity. It gives you the ability to get the best pace because you are more productive than your competitor. 40% more store productivities than our competitor. If I take the American closer competitor, our sales per square foot is almost 2x their sales per square foot. If I take -- and why? Because we are more in apparel. Apparel generate more sales per square foot. It's more dense. You've put more clothes on a 1 square meter and you put footwear. So that is plus 10% penetration of apparel compared to our competitor. If I take a major competitor, plus 20 points, double that. And we are good on digital. We have 12-point more digital share of business than our competitor. So this is about JD as a brand, but what about JD Group and how is JD Group. So here, I'm coming to the group. And the way I have approached the group have been trying to be very rational. There are 65 fascias in the group. And I didn't know that before I joined. Perhaps I will have not join if I know. Sorry, this is good. And 65 facia and the way I say, well, let's try to organize my time to be the most efficient possible. And I say, I will discover business by the size of the business. to start with the bigger and to go to the smaller. I'm still not at the 65 one. So -- and I -- because it's too much, it's too much complexity, too much. And it's not good for the small business because they don't get the attention they deserve, and it's good for the big business because they get the complexity of managing small business, which are not yet in the same league. So -- and it's really important to understand that. We can say, well, synergy and all that stuff. Now the reality is that it creates complexity. And this is an example of real life in September, I had an e-mail someone in IT saying great -- what's the name of -- now for Cricket is online. So Cricket is 2 stores in Liverpool for the life of the footballer. That's the concept. That's correct to say? And it's online on the same platform at JD. And I said, "Wow, this is a great news." And I called the guy I say, "Are you sure?" He say yes, yes, I'm sure. I say, okay. So why it is a great news because what you're doing is that using the same platform for GBP billion business, for a GBP 20 million business. And you imagine the complexity now every time I want to do something on JD, I need to do the regression test for Cricket. And every time Cricket wants to do something different, they need to ask JD to do something for them, which they will not do it. So just to get that -- which is normal. It's just -- and so that's the type of complexity that you have by putting all those business together. And so our focus is going to be the 6 business that represents 90% of our total revenue and 95% of our total profit. And so -- and those 6 business JD, I spoke enough of JD, so I will not go anymore. Shoe Palace, DTLR, and I think we have George and Todd in the room. And a great business in U.S. community responding to a different need for the consumer, different link with the consumers than what JD will do. Sporting Goods business, Sprinter in Spain, Sports Zone in Portugal, Cosmos in Greece, Actinver in Netherlands. Great business, the same we have Angel. We have David, we have Midwell. We have Michael in the room. I think it's the business we have in those countries. Go Outdoors, we have Lee in the room, which is our business best brand and the business that we have in outdoor in U.K. Sizeer, which we have Christophe in the room, which is about a more female customer in Eastern Europe. And Sizeer and Footpatrol will play a very high role for JD to test new product to elevate the proposition and to be -- to fuel JD with innovation and new product. So that's really where the core of our business is. So in summary, we are in a great market and a market that is accelerating. We have a lot from our customer and resilient customer, strong results. We have partner who are supporting us. We have headroom for growth and less is really more, and that is really important for us. So the strategy and the strategy we, as a team, we want to become the leading global sports fashion retailer. And this is based on 4 elements of it, JD brand first, first in the world, first in terms of our priority -- complementary concept, how we can fuel JV with different concept with different reach of customers with different products. JD beyond physical retail, and JD best for people, best for our partner, best for the community. So JD brand first. I think that as you have seen and as I explained, there is a lot of growth to come in terms of opening doors in the U.S. So it's about accelerating our store opening and our conversion and grew apparel. Nigel will go in more details and explain how we came to that and how we will do that. Just to give you 2 or 3 numbers, we have 127 stores today. We believe the potential is 800 stores. We have 400 Finish Line store to convert to JD. So half is conversion, half is new store. That's to give you a sense of that. Currently, we are opening 50 stores per year. We need to move to 100 stores. 100 stores seems a lot. At the same moment, Lululemon is opening 100, 120 stores a year in the last 3 years in the U.S. So in the U.S. it's something that other people have achieved. So that's for Nigel to come. Where we come from the number, just to give you -- so it's -- we have done that through a model that we have in terms of geomarketing, in terms of we get a mobile element in order to know the traffic. So it's done catchment-by-catchment area, area by area. So it's a very precise work that we have done because the good thing of that, we already cover all the U.S., all the state with our business. So it's just putting that in the model, understanding where the potential is and coming with the number. And because we were -- we wanted to make sure because it looks too good to be true, we asked BCG to come into challenges and to produce a model. They have done that. there are challenges, and they come almost to the same number, a little bit different, but frankly, no big difference. Europe, the same. We have potential to extend in Europe. Europe, as you know, is more complicated than U.S. It's a more complicated area. So it will be done to opening stores as we do today and to acquisition. Acquisition of those, like we have done in Italy, we bought 20 do fashion struggling retailer and we convert those to JD. So that will be the way of looking at that. And for international, out of those 2 markets, we are looking at franchise, I think franchise, having been a franchisor and a franchisee. It's a great model for smaller market more complicated market. We don't want to put assets and people who have been in Russia know that today, franchise will be a better way -- a better bet than putting their own assets. So it's a way to address more market more quickly, and it's about taking less risk in doing so. But at the same moment, we're still looking at acquisition if in strategic markets, we will do what we have done in the past. So JD brand first JD complementary concept. We recognize that there is 4 things that create value for us. The first one is what we do with Sizeer and Footpatrol and IP is to test new product is a more elevated, more exclusive product offering that gives us the ability to understand the trend, to understand what's happening. Mike will manage it at the same time as many JD because that will give him the ability to really learn from that to test product and to make that happening for JD. The second part is our its complementary sports fashion offer around women. That is -- it's underpenetrated today and about community brand in the U.S. The same we know that there is room for growth, and we are committed with our to grow this community brand in the U.S. Sporting goods, it's about elevating our proposition in Spain, continue the good work we are doing in Portugal, turn around our business in Netherlands and just trying to build a strong business to compare Europe. At the same moment for outdoor, we are a strong position in the U.K. We want to really dig out and push go outdoor in terms of being the reference in the U.K. market for outdoor. For the rest, you have seen we divest fashion, and we are looking at all the other noncore assets to make sure that we really focus on what matters for us and what makes the difference for us. JD beyond physical retail. So I'm going to try to be a little bit more inspirational, more complicated. But -- so this is about our young customers. This is where they spend their money. And we talk a lot about physical footprint. At the same moment for a brand today, we need to be in the digital space because that's where you exist as a brand. So if you take the 16, 24 years old customer, which are our key carats, we represent already 26% of the wallet. And when you touch footwear and apparel, you touch what something very important for them because that's the way they express who they are, what they are doing, how they belong with a community. And we believe that with fitness, and we have Alan, which is running our fitness business here with JD Fitness, we -- it's part of this teenager experience. And we have identified areas where we can expand. And I think all the idea of that is to build a super app for the young to give them the access to more than only what we do for living and to build a partnership to do some other things. So then we can do by ourselves through a C2C, so customer-to-customer offering, and we are working on that. But after that, for music, for example, retailer, they are the radio. So they just create the experience for the consumer, not only in the store, but in terms of that. You can imagine a playlist, JD playlist that a customer can access through the app. Gaming, we have some partnership in gaming concept. So you see how we can do that. And the first break of that is to develop a loyalty program. We have one in the U.S. We don't have one in Europe, in Asia and in U.K. And this royalty program will be based on a technology that is an app technology that give us the ability to create more partnership to understand better our customer to enrich our data. And the big thing is to be able to communicate because retailer, we have a lot of data, but data without the ability to communicate after to the consumer, it's a little bit useless. This is where you have the 2 ways. You get the data and at the same moment, you communicate with your customer. And that gives us the ability to enrich us and to leverage partnership because when you say I have the biggest community of young adults and Mr. Spotify, if you want to do some business with us, we have that, and we can do a partnership. We can create a specific playlist. We can go to gaming. So that's about building JV as a brand and beyond our physical retail. At the same moment, we need to make sure that our house is in order. And I think that we have developed a digital business, but this has been developed like a separate business. So we are very weak on the omnichannel functionality. We are okay in terms of digital, but we are not good on omnichannel. So Click & Collect, for example, was a 3-day, 5-day delivery time. So this is not click-and-collect. Click & Collect is the same day or next day. So that's something we have changed, and that's coming. So there is some things happening. Our kiosk, which are good functionality, didn't work out of the U.K. So when every time I was visiting a store, I remember visiting in Portugal. And I say, why is the Mankind in front of the kiosk, because it doesn't work, it's embarrassing. I say, okay. So let's take the Mankind out and make the kiosk work. So there is a little bit of all this link that we need to do in terms of being very real omnichannel to put the 2 team technology team together to work together to make sure that it's one experience for the consumer. Delivery speed in Europe, and that's following the Brexit is that we are not able to deliver quickly enough in Europe. We are out of the market. It's the same. It's 3 to 5 days. We should be next day. It's because we didn't build the facility in Europe, that's coming. We built a new warehouse and Sherilyn will talk about that. We have a state-of-the-art warehouse for in Derby for e-com, which will serve the U.K. market. we will build the same in Europe to get the same delivery speed that we need to be in the market. And it's about our store colleagues to give them the right tool to do the job. And we have developed -- we have an IT which in terms of functionality, which is great because it has been developed internally. It's doing what it should do, which is to capture all our process. At the same moment, we didn't invest enough in terms of our network in our stores. So the network is not working always as it should be. We didn't give enough and held to our sale assistant -- and when we do that, I was astonished, in December, we gave more held in our key store, 35% of the business was done on D&I. You imagine on the mobile post. So that means that I'm sure that half of those customers will have leave the store without buying if we didn't have this tool to do that. So that will be put in all our business just to force to make sure that we are delivering a great service to our customer and give the right tool to our people. So JD, best for people, best for partner, best for community. That's the last part of it, the most important one. First, our long-term partnership with our brands, Nike, Adidas, VF on running. This is something that is so important for us because it's a fuel that drive our growth. And as you remember, in September, we signed NikeConnect, and I think Sherilyn has done a great job to do that and to work on that. That gives us not only access to all Nike product and not only give Nike access to our customers, but it gives us a commitment for the coming 3 years in terms of allocation. And the plan that age Neil will explain to you in terms of double-digit growth is a plan that has been agreed with Nike in terms of allocation. So we have the product in order to drive the growth because it's good to open doors, but if you don't have product to put in your dose, it doesn't really work. but this has been agreed on a 3-year basis. So we have long-term partnerships with our key suppliers. Same moment, we access the full assortment, not only Nike. If you take VF and that was a great success online, you get the full access for all the VF product on our website to get the full access to Adidas. So that gives us really the ability to trade not only the product that we curate that we choose for our customer, but all the products that the consumer can think about it. And last, our product development with the brand. And this is where Asian this is what the brand is saying, we have the best buying team in our industry. We have the best group buying director with Mike. We are the ones that make a difference in terms of choosing the right product for our customer. And really, I was amazed when I was in Nike to see how the Nike people are looking at me and saying, do you like it?" And they're just so nervous about -- and Mike is quite straightforward. So he was very nervous about the feedback and to say, what is going to say today. And that gives us the ability to choose the right product to develop the right product for our consumer. And almost 50% of the product we are selling, you cannot find in our competitor. And that's a lot -- and that is telling a lot about the partnership we have with the brand. So that's about best for our partner. Best for our community. Community is important, and we learn a lot, and this is where the fact that we have 2 different concepts help us. I think we learned a lot from Shoe Palace and DTLR in terms of how you have the community in which you said, how you do something specific for them, how you develop that? And I think it's about us providing job, providing a partnership, integration, social mobility. The foundation, which is not only in the U.K. but in all the country operate is a GBP 3 million -- GBP 3 million to GBP 5 million a year money that we are spending in the community in which we operate. And spending this money just to help this community to have a better life to have enjoy sport, enjoy life and really about finding job for them. And I think we have a vision and I think to get our up program, 50% of second school in U.K. over the next 5 years to inspire the next generation of confident, resilient and skilled employees. So this is what we do in the community. At the same moment, we have worked a lot on the environmental. I think there is a team which is passionate about it in JD. And JD Group is in the top 4% of retailer when it comes to sustainability. And that's the sustainability index that has been published, and we are in the top 4%. At the same moment, we are classified in the carbon disclosure project. And that has been for the last 3 years. This is much better than all our competitors and most of the retailer, except on a few of them. And I think it shows that we take it seriously. We take its seriously to disclose, to measure. We know that we will be 0 in 2043, seems a long time, but that's the time it takes for our brand partner -- 92% of our carbon emission come from the product we are buying and selling. So we -- so what we did is to really manage and challenge our brand partner to say, what are you going to do? Because this 92% it's not -- I cannot do something by myself. If I need to do something with them. Same but on the 8% that is under my responsibility, 4% is about the end of life of my product. That's why the second hand products is important for us because that address 4% of my total emission. So that's about us. That's about the way we work for the community. And last, but first, our people. This is a presentation. This is a PowerPoint, but that exists only because there is people behind. It's exist only because there are people that want to achieve that are working for that. That's the value of this presentation is the people that is beyond that. And I think that we have great people. We are people, as I said, we start with us at 16 years old, and they are still with us. 90% of our store manager start with us as a sales assistant, 90%. I don't think there is other retailers that can have such a high internal sourcing, internal development, internal team, the JD Academy. And that is something we do for our people and something that will provide a unique opportunity for them all over the world; in U.K., for sure, in Europe, in U.S., in Asia, in Australia. We have people from JDA all over the world, and that is what is unique about us. And I was 2 days ago in our Oxford Suites, and I was discussing with the area manager. And he was -- and I was saying what is your story and say, well, I start in this store when I was a sales assistant and you know my manager is today my regional manager and the store manager of the store at that time is today the group retail director. So that's the story, and you have plenty of story like that in JD and it's a great story, and it's unique. So at the same moment, we need to reward our people. And I think sometimes we have been rewarding through promotion, recognizing them through promotion, not perhaps always through the rewards. I think that we are now paying the same, whatever your age, and I think it was important for us to do that. We have extended our bonus to all our managers in the store, which was not the case. And we will reward with more equity, and I think that Andy touched about that, our top management, which was not the case in the past. So that is about us to become the leading global sport fashion or house. We have the people. We have the brand support, we have the brand love. We have the infrastructure to deliver our ambitious growth plan to become the leading global sport fashion for us. So that's for me. I think I talk a lot, but I will let now hand over to Neil to explain you something that we are not interested at all, which is the financial. Thank you.

Thank you, Regis, and good afternoon, everyone. So what are the plans that Regis has talked about, how do they convert into financial objectives over the next 5 years? I suppose these are best framed in 3 key measures. If we start off with revenue growth, we're looking to achieve revenue growth, double-digit revenue growth on average over that 5 years. I must emphasize the word average there. So we're not saying that we'll have double-digit growth every year. because there will naturally be an acceleration in the later years of this program as the plans that we're talking about as they gain momentum. So we're not changing guidance. What we said before about this year, the year 2024 remains true. We're -- that guidance is unchanged. Double-digit market share. So as Regis said, we have a double-digit market share in 3 markets at the moment. So that's the U.K., Republic of Ireland and Australia. What we're doing today is demonstrating the clear plans that we have in place to reach that same benchmark in other key markets. The path that we're looking to follow is it's a very well-worn one. JD has got great experience opening multiple stores across multiple markets with consistently high standards. It's just what we do. And Nigel will talk about that, that shortly. It's just say, it's something that we just designed and set up today. And in terms of the operating margin, the profit margin, JD is already a group at around that 10% level. And the plans that we're talking about today, we're not going to chase revenue just for the sake of it and sacrifice profit. The work that we do and the plans that we're putting in place are designed to be profitable plans and to maintain the margin where we are at the moment. So all our financial discipline, all our financial rigor when it comes to opening stores, the hurdles that the stores have to reach, none of that will change. The same discipline will be kept in place. So this revenue and profit growth that we're talking about today over the next 5 years is going to be powered by a significant increase in our annual CapEx spend. Now I've already guided to GBP 500 million plus for this year. So that's already in the market. And that level will be the norm over the next 5 years. So if we think about that spend in buckets, then the biggest bucket, the principal focus will remain investment in the stores, whether that's opening new stores refurbishing existing stores, extending existing stores, et cetera. And in the same way that our financial rigor won't change, the standard and quality of the fit of the stores won't change. We've always had a view that having the premium fit for the stores, it elevates the product itself that we sell and that helps to bring in the levels of footfall that we do. So none of that will change. We remain absolutely committed to elevating standards in stores and creating that retail theater that's so attractive for the consumer. In terms of technology, which is the second bucket. Regis talked about this already in terms of our desire to be closer to the consumer and to create more of an omnichannel model. And we'll do that through data through analytics, through creation of loyalty programs, et cetera. All of that will need investment, and that's why that's a significant investment, and that's why that's, say, the second biggest bucket. And then the third bucket that we're talking about there is logistics in our distribution. So you're aware of what we're doing in Darby and Helen those projects are already well progressed, particularly Darby that's already starting to fulfill products. Doing those projects isn't just about adding additional capacity into the logistics network. It's also about speed of service. As Regis mentioned, our online proposition at the moment in Europe is not great. He's taking too long because that product is still coming from the U.K. So moving that fulfillment over to Europe will take days out of that process, and we'll get the financial benefit from that as well. And then just in terms of cash, you'll have worked out. We generate at least GBP 1 billion a year in cash from our operating activities. In terms of the priorities for that cash, historically, we've always had a view that keeping the cash in the business to invest in long-term opportunities for stores, developing stores and M&A is the right way to go and say it gives long-term value to shareholders. That overriding principle isn't going to change. We still think that's the best use of funds. So in terms of stores and tech, that will absorb what half if you have half of our annual cash generation. But even so, we've still got the financial, significant financial resources to then fund M&A activity. Now I know we've been quieter recently when it comes to M&A. But our appetite to complete meaningful M&A is absolutely undiminished. And then I've just got share buybacks and dividends on that. That's really just a point that we like to be more flexible in terms of our capital returns structures going forward. We've not been able to do share buybacks previously. We've not had the authority from shareholders to do that. We will look to get that from shareholders at this year's AGM. Now I'm not saying we're going to do share buybacks, all we are saying is we just want to be a bit more flexible about how we approach returning capital to shareholders. And then the final point I would just make just at the bottom there, it's something we're very mindful of. We have a number of minority interest in some of our subsidiary businesses. And there are certain contractual commitments to them. They're not all in one go. They're not all now. They're not all next year, the kind of phasing through the course of this time line. So we're very aware of them, and you should be aware of them as well. So just the 3 takeaways, the 3 key points really just to reiterate, one is that double-digit ambition across our various channels, different measures, but double-digit measures. The growth in revenue and profit to be powered by an expansion in our CapEx, additional investments in CapEx. And then our cash, we will use in line with our strategic priorities, but focusing very much on those long-term opportunities around CapEx and M&A, which say, give that long-term growth in the business. I'm now going to hand over to the team who -- whilst I talk about it, they're the ones who are actually going to have to make it happen. So we've got Nigel who's the Group Property Director. He's going to talk about how we make it possible with stores. We've got Michael Armstrong group buying Director, who'll talk to you about products -- and then we've got Sherilyn Paterson, who is Group Ops Director and talk she'll to you about operations. Nigel?

Thank you, Neil. Regis talked about having room for growth. And hopefully, this slide gives an indication of the significant opportunity we have globally to grow the business. We're sharing numbers here, which we haven't been renowned for in the past, so a bit of pressure on here. But the opportunity across all these markets are there to be seen. We've got locations identified behind each of these numbers that we've mapped out as being suitable locations for JD. So in terms of North America, we've recognized here an opportunity, Regis was talking about up to 800 stores, I'm going to say above 500 stores, but a significant opportunity both from new and also existing locations where we operate as Finish Line now, which we will convert, relocate or upsize as the case may be, roughly an equal split. Europe is also a significant opportunity in excess of 400 locations. We have particular success at the moment in the main markets in Spain, France, Italy and Germany. And they represent significant opportunities to continue to grow. And like America, already operating in these markets give us the confidence to continue the development in these areas. We also, of course, have teams in place in these markets. They're already developing stores now. So really in terms of increasing the pace, it's about increasing the resource. In terms of the rest of the world, we've 300 stores in existing and new markets, but we see this really being fueled by franchising. And the U.K. really is about upsizing of 400 stores, we're pretty saturated in the market. But over the last few years, we've been particularly successful of upsizing in this market. I have to say it's not just about the numbers. We have very slick disciplines in place in terms of site selection. So we know what works for JD in terms of store size, shop fronts, adjacencies, and we'll continue to make sure we take a disciplined approach to this increase in pace. We also have a very strict approval process in place. So all new stores will continue to go through that appraisal process. So all the key metrics, including payback, which when clearly, you're making an investment of significant of this is important. And finally, lease flexibility. We've always taken a very cautious approach with regard to our leases, and we'll continue to make sure we do so going forward. around the globe at the moment, we have an average lease length of between 2.5 and 3 years, and we'll continue to make sure we have that flexibility built in. So in terms of the takeaways, I think we've identified a significant opportunity for growth. We do have experienced teams in place to actually deliver this rollout, and we've got a very proven site selective process that we'll continue to follow. So that's it from me. I'm going to hand over now to Mike who obviously deals with the product that goes in the stores.

Okay. Good afternoon, everybody. So for over 40 years, JD has a laser focus on supplying young people, our core consumers, 16-to-24 year olds, the latest and greatest in sports fashion. We do this -- over the years, we've built a unique position by offering head to toe looks through elevated retail environment. And obviously, I have a parallel offer within that is a clear differentiator for us in the marketplace. We are a multi-brand and multi-category retailer as well, which from a consumer point of view, it gives us a benefit of having an unrivaled choice and selection, which really meets the needs of the way that young people want to shop nowadays as far as brands and product types of concern. And also, our -- the JD brand perspective that we have is really unique as well. We live and breathe the lifestyles of our consumers, and this manifests itself through things like social media, strategic partnerships we have and also the brand ambassadors that are the front-facing part of the business. So yes, we believe we have a great connection with the consumers, but we also have our brand partnerships as well where we believe, as Regis has already touched on, we're in we do have great relationships with the brands, and this is primarily because JD operates at the intersection between where the brands are and where the consumers are. We set right in the middle of that. So for that reason, we have a very dynamic and collaborative relationship where we work hand-in-hand to really deliver products that we know our consumers are looking for and a lot of those insights are coming from the JD buyers, delivering that message to the brands to make sure we have the best, most relevant products. And this is obviously a mutually beneficial relationship. We both rely on each other. But the increasing scale of the business that we have as well in recent years has given us the benefit of being able to take this product globally, which has been obviously great for us as well. And then within -- again, Regis has touched on this. We have the banner ecosystem of foot patrol size and JD. So we work collaboratively with the brands to launch products, specific products through food petrol where we can see and incubate them into marketplace. And then we can also get early insights and early reads on future trends for sales, which has been massively beneficial for us over the years. So yes, we have a great relationship with our partners. We think we understand our consumers pretty well. But for us, really, it's all about products and product is king. But in our world we think that or specifically for JD, we think that product for us is really our ace card. We are highly differentiated, sorry, we have about of all apparel that we sell is exclusive and about 40% of footwear is entirely exclusive, and we have tailored obviously, having an understanding of what our consumers are looking for. We have tailored and curated ranges, which focus on each country, region and even down to the city depending on how influential it is from a trend point of view. These curated ranges allow us to really double down on key looks, trends, moments to maximize the opportunity, which makes ensures we're commercially successful, but it still gives us a slack to offer the breadth of choice that our consumers are really looking for. And the last point when it comes to product is on our own labels and licensed brands portfolio. These operating niches in the marketplace that the bigger brands don't really tend to play in, which is -- means we're not really trading on anybody's toes or upsetting our branding partners. But there's some clear benefits that we have with these brands. They offer us obviously some higher intake margins, but they give us a quick response time when trends are changing, be we need to get on something pretty quickly. But also what we're finding as we move internationally, more and more, these brands allow us the ability to offer really competitive price points, which is particularly appealing in some of the emerging markets that we operate in. So really, in a nutshell, we think we get the consumers. We've got the brand partnerships. We believe we've got the product, but we've got to make sure we can get it to the consumer as well. So with that, I will pass it over to Sherilyn.

Thanks Mike. Thank you, everyone. So let me talk to you today about supply chain and technology. So I'll start with supply chain and operations. Over the last few years, we've seen some real resilience in our group as it stands, and we've already put down some strong foundations within our capacity and our networking. Last year, we had a U.K. online facility delivered on time and on budget. We'll actually see the rewards of that this year. We have -- we're building an excellent European site for our European online and online business this year, which will see the sort of real capacity come into play next year. In terms of North America, we've got an extended facility looking around for George, with Shoe Palace this year and also halfway through a network plan, which will mean that we can put the right facilities to build the right modeling Nigel's geo work to get capacity to North America for our 5-year plan. In addition to this, we've also done work on our previous kind of secondary complements whether it be size here, outdoors, sporting goods, and we continue to build that capacity. If we then look at what else we're going to do in terms of the supply chain, it's not just about capacity. For us, we're looking at different initiatives from the brand work that we can do to optimize our volume, digitalizing our supply chain to make sure that we've got not only the speed to market for the consumer, but as carbon neutral as we can and moving all of those costs further away down as we grow the business. We're also looking at in terms of our head office, how we build all of the complexity that we are building and how we make it simpler. If we then talk around technology. So obviously, we've got to use build CapEx wisely. We're upscaling our investment to support our ambition and our desire to be the global omnichannel retail powerhouse. This will cost money to move us and keep us agility and resilience. For us, we will put all of our efforts into making this actually putting the customer at the center of this, whether it be the technology around how we understand them, how we move through our stock allocation systems, which we're improving and see the benefits of how we see improved stock and store optimization, which will help us be -- make a bigger estate more quickly. or indeed, our investments around how we can service our store -- our customers in-store quicker. So this could be from mobile extra mobile payments and improved click-and-collect experience, a seamless return on kiosk experience. We have 100 initiatives all around how can we serve our customer, whether it be retail or online better. And we just will keep us on top of this, living and breathing it every single day. So the benefit of this is obviously in the sense that they will spend more. And through the last few years, globally, we have seen an improved average order value conversion. However, difficult the challenges have been moving between channels, we have shown ourselves to be really resilient with the help from our retail colleagues, distribution colleagues and online experts. So a good bit about being a group is that we can steal the ideas across the book piece. The Americans did an excellent job in terms of loyalty cards. So they have 5.7 million active people already with over 50% adoption of loyal people coming in shopping each time. Sprinter has nearly 2 million in their loyalty plan. So this year, we're going to launch the JD European loyalty card, which will help service as an online and off-line through rewards experiences that will dot that into Michael's product and understanding of the consumer. This will also help us have a single customer view that within U.K. and Europe, we have not had before. It will help us tailor our communications. That will help us be more efficient, it will help us really retain that customer through its lifestyle. So finally, what's to do in terms of the technology and distribution space, but we believe that this evolution will really help us deliver the growth plans that we just have set out earlier today. I'll hand you back over to Regis.

Thank you very much, Sherilyn. So I think that is the end of the presentation. We'll move to Q&A. So it's about becoming the leading global sports fashion powerhouse. I think JD brand first, JD complementary concept, JD beyond physical retail and JD best for people, partner and communities. So we move now to Q&A, and we just need to put the table and the share for all of us to come on stage and we'll answer your question.

It's Richard Chamberlain from RBC. Maybe I can just kick off with a couple of questions, if that's okay. Just to confirm, so Regis, the store targets that you've got in place sort of roughly 300 a year for the next 5 years. It sounds like the vast majority of that is going to be organic growth. Is that right rather than coming from acquisitions? That's the first one. And the second one is looking at the CapEx projections, GBP 500 million to GBP 600 million, including, I think, just over half to be spent on stores. That would imply, I think, per store or per new store the CapEx is going to be quite a bit higher on a sort of per foot basis than it's been historically. Does that imply that the majority of stores are going to be the sort of higher-end shop fits, so the bigger better kind of premium JD facelift stores? What why is the CapEx much higher than it's been historically?

So I will start with the first one in terms of store, yes, for them it's more -- so there is 3 part of it is conversion, which is the U.S. story because we have doors to convert. It's about new store in U.S. and in Europe. And in Europe, we recognize that to find as many or as we try -- we want to find. There will be certainly some acquisition which is the type of 20, 30 or more doors depending on where we are. So we have not factored something specific. So we put in terms of CapEx, the same CapEx as an organic one because you cannot plan for acquisition, but we know that we will need a little bit of acquisition to get the door because it takes more time in Europe to get the right dose. So that will be the answer. Concerning the cost per store. I think that...

Yes, I'll take that one. So I think there's a couple of things there, Richard. One is there'll be a refurbishment program as well. So obviously, you've just taken total CapEx and divided by new stores, but there's a refurbishment program as well. And secondly, I would say that the average size of stores that we're doing is progressively getting bigger because that then gives us more space to do more apparel, which is, as Mike pointed out, is really our point of difference.

It's Warwick Okines from BNP Paribas Exane. On the same sort of theme, how are you going to ensure the same quality of stores are delivered as you ramp up the program. Perhaps you could say a bit more about the site's approval and the financial evaluation process, please?

We've got the -- we've got very experienced teams around the globe. So in terms of ramping up, we're just going to use the same teams, but obviously, we've similarly experienced people going to be growing the team. So we've already got processes in place. So I just need this additional resource really to roll out. We're not doing anything different. All the process that we do as I was saying in my presentation will be the same. We absolutely insistent that we are as disciplined about all the stores we take and that we appraise and approve all those stores in the same way.

And the other point I would perhaps add is that Regis and I sign off every new store that gets approved. So there's a really detailed property Board meeting that sits on a regular basis. We both attend that and we sign off every store. So it goes through a really rigorous process, and there's a number of metrics and hurdles that sort of passed before it gets approved.

It's Graham Renwick from Berenberg. Just firstly on margins. How should we be thinking about development of margins? Are you going to be holding margins broad flat as you invest for growth? Or should we be assuming some sort of leverage over the next 5 years? And then perhaps just longer term, where are your margin ambitions? Because I've noticed sort of the APAC business is already at 15% which is close to the U.K. So is that a proof point that international faces can sort of trend towards U.K. profitability in the long term? And then just on M&A, if it's still on the agenda, what sort of markets, what sort of types of businesses are you going to be looking to? And is there any sort of structural reason why you can be looking at other regions like Lat Am or China, for instance? I just want to get your thoughts on that.

Okay. I will start on profitability, but Neil will correct me as I said something wrong. Now on profit, I think it's a growth plan. And I think that -- I would like to insist on this plan. And I think that was the guidance of I found it when I joined the business. And I think that was your first remark, this is about a gross business. So that's why we target, we believe that the level of profitability that we have is world-class. And I think that we believe that we will invest to grow the business more than to grow the top line. For sure, it will grow by definition because of the volume. But that's where the philosophy that we have. And there will be efficiency gain. At the same moment, there will be investments that we need to make in terms of our infrastructure. So we believe that the level of profitability that we have today, and you rightly mentioned that we tend to have a high level of profitability everywhere we operate. So it's not a big gap between U.K. and the rest. There is a little bit of gap, but it's not a huge one. And I think that we are really happy where we are, and we want to invest in order to deliver more growth.

Yes. I just will complement my answer. Yes, just follow up by saying initiatives like the technology and loyalty is not just CapEx, there's OpEx in there as well. So you've got those levels of OpEx. And as Regis says, there will be leverage that come through in other areas, say, like logistics as that gets more efficient. But broadly, we see all those netting out and staying equal. I mean, the only thing we're saying again, Michael, take me if I say something wrong here. But from a brand perspective, you know over the years, as you grow, you don't get better terms so better terms from brands just isn't on the agenda. So this is about OpEx, I think, for me, is that fair?

A 100% because that was the second answer. So on M&A, I think there is 3 parts on M&A. The first one is about doors in Europe. We need more doors. And I think that -- and in a certain way, diversity fashion doors are the ones that we are more interested in it. And as you know, fashion is going through a difficult time. And I think we will have some opportunity because it's about those doors convert to JD. And we know that we perform better when we are close to the fashion doors. So that's the first thing. So that's practical M&A activity. In terms of the second part of the strategy is complementary. So we are looking at things that can complement our offer. And I think we were looking at that and with a very disciplined way. So it's not complementary and everything is complementary. It's really in our area, in athletic leisure, where we can complement what we have. In terms of geography, I think LatAm is one of the regions where we can envisage to do M&A. We have not -- we have started the reflection. We have not concluded on this one, but you're right. I think for me, China is not the -- is not on our plan. China is a lifestyle market and it's a monobrand market. So everything I said in terms of us being complementary to the brand doesn't apply to China. So in China, if you take Nike, they are lifestyle already. They didn't come from sport and I think that doesn't give us differentiated enough and added value enough for the brand to go there. So I don't believe that China is some way for us. I think that there is a lot of area to compare without going to China. Hope I answer your question. We'll go from front to the back.

Simon Irwin Credit Suisse. A couple for you. If we step back 5 years, one of the arguments for M&A was always that the big brands didn't want to see a lot more space being added, particularly as they move towards D2C. Has that changed? Obviously one of your big partners does look as though it's done something of a shift, allegedly a big meeting in America in October, talking to wholesale partners. So essentially, have you got sign-off from your brand partners for this big acceleration in stores, particularly in markets which are already got a lot of stores in. Second would be, in terms of online, is there a level of online penetration when your store sales density starts to fall and that impacts your overall profitability? And kind of where would that be? And is that a concern?

So I think, yes, in terms of -- I think Nike start to understand that, first, I think in September, it was really back to we'll sell and saying, well, we love you, and we try to not to love you, but we love you. So I think that was the first message. The second one, I think, is in terms of doors. I think you're right in sporting goods. I think that they start to differentiate the view between sporting goods and lifestyle. And I think that is certainly true in terms of number of dose for sporting goods is certainly less true in terms of number of doors for lifestyle. So I think that's the differentiation that we'll make. And I think it has -- we had the discussion with them, and we had the support to do what we are doing. But I think that the big difference, I think before that, they were looking at 1 view looking at a number of doors. I think that they differentiate the 2 which benefit to us because we are a lifestyle operator. And that's where -- and I think coming back to my point around why we exist, I think we exist in this partnership because we win something they cannot do and they recognize that. And I think that, it will be a little bit different for sporting goods. I think they can do that. I think they are a lifestyle. It's a more complicated for them to do. So that's why it gives us much more opportunity in lifestyle than in sporting goods. Concerning the online, I will give you a number, which is 90% of our customers go online before going in store. So the fact that it's 35%, 40%, 25%. Frankly, it doesn't really matter. And we know -- and this is -- this has been my experience in all my job is that the more stores you have, if you have a store in the catchment area, the more you do online, and that is continuative. And I mean that's a reality. Every time you put a store, your online business go triple or quadruple and you say, well, should not be the case, but that's a reality. So the reality is that there is no good percentage of bad percentage is a total account, 50% of 0 is still 0. So what is important, I get the business. And I think the starting point for our business is to have doors because that's where we were originate and this is where we interact with the customer. So I'm not nervous at all in terms of the online penetration. I think we had the crash test with COVID in terms of store. And I think what is really reassuring for brick-and-mortar retailer is that after the crash test people came back to the store. And at that point, you could argue and you could have been very nervous to say now that everyone has opened the count. Everyone tests the Internet. Are they going to come back? They came back even more than what we were expecting. So I think that the real -- and we know that they had a free lunch for a long time, the pure player. But today, now they have to get the return, there is no business model. So the real business model is in brick-and-mortar and the 2 proposition. So I'm not nervous about whatever the percentage. Still I'm doing a lot. I'm happy about a big percentage of a small percentage.

It's Grace Smalley from Morgan Stanley. I have 3 questions, please. The first 2 are quick financial clarifications. So on the double-digit revenue growth, could you just clarify how much of that you expect to come from new space and the store acceleration and how much is from like-for-like revenue growth from our store base? And then also on the margins, it sounds like you're essentially embedding margins flattish. Do you expect to hit the double-digit margin in every year of the plan? Or is there any phasing we need to think in terms of the timing of investments or any of them being front loaded? And then my last question is more on the competitive landscape. You showed the slides there showing JD's higher like Net Promoter Score. Are you seeing any changes on what your competitors are doing and in particular, in North America where one of your key competitors is also under a new management team.

Right. So in terms of the drivers of the revenue growth, then that will change, I think, over the 5 years. So it will take time to ramp up this accelerated program of store openings. So I'd say probably this year, you might be looking at, say, like-for-like growth of, say, I don't know, probably about half of it. And because I think we've gone for revenue growth this year, we guided about 7% I think, something like that, such probably about half like-for-like and then half is space. And then thereafter, the amount that will be contributed by space will increase. And it will probably end up being about a 2:1 relationship between like-for-like and space growth. And then in terms of margins, yes, probably flattish every year is what my expectation would be around that 10%.

But it will be double digit every year.

But it will be double digit yes.

On competition, I think that it's a little bit unfair what's happening is that we come into the U.S., we have a brand-new store. And our main competitor there they have 15 years old store. So it's very unfair. And I'm really sorry about it, but it's very unfair. If you are a consumer, what you will go do you go to a store that is 10 years old that is the store of your dad or you go to the brand-new store shiny and with digital. I think it's an easy choice. And I've been in the other position, which is how you're going to justify to invest in your store estate to stand still, very difficult to do. We invest in store and we're growing. So it's much easier because we get new customer, new business. So our return is a very good return, very quick return I would ask on is the type of payback we have. But if you have an existing store, what you do? And I think that this is a difficult question and especially when you have not a new concept or something really new to offer what are you offering new? We are very completely new experience, a lot of digital screen and all that stuff. And we get the return because it's new because 100% of the sales are new sales. When you start with a certain level of sales, much more complicated.

Jonathan Pritchard at Peel Hunt. Staying in the states, do you possibly need a new format? Obviously, you've got the vast majority of your stores at the moment in shopping malls. Of the 300 sort of white space JDs, is there a need for perhaps a neighborhood 4 month, something like that to evolve? Secondly, just sort of numerically, what's the plan in terms of DTLR and Shoe Palace openings? And then thirdly, on cash and distribution. Are you mindful of the brand's reaction to being more distributive with the cash. Is that something that sort of plays on your mind if you're more expansive, would they perhaps take that badly?