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

Good morning, everyone, and thank you for joining this JD Sports Fashion Plc trading update covering the outcome of the financial year to January 2024 and guidance for the new financial year ending January '25. I'm Dominic Platt, CFO; and with me on this call is Régis Schultz, the CEO. Hopefully, you've had a chance to see our statement earlier this morning. And on this call, I will give a brief summary of the statement, and I'll hand back for questions. We ended the financial year to January '24 with PBT before adjusted items in line with the revised guidance of GBP 915 million to GBP 935 million, which we gave at our early January update. The final result will, of course, be announced at our prelims. Q4 like-for-like was marginally ahead of the prior year. This should be seen against the strong comparative in the prior year, which saw Q4 up almost 20% on a like-for-like basis. January was as expected and reflected the elevated promotional activity we have seen through peak, particularly online. Footwear again outperformed apparel in January. Overall, for the year, we once again outperformed in what was a challenging market with over 8% organic sales growth split fairly equally between like-for-like growth and new space. Our athleisure fascias, mainly JD and our U.S. community brands, delivered organic growth of over 10%. This growth was achieved despite less product innovation and elevated promotional activity, particularly online, seen through most of Q4. Sales were GBP 10.5 billion, up 3.6%. This is net of a 6.2% impact from disposals, and we benefited by 1.4% from the 53rd week. Looking at the regions. U.K. Republic of Ireland like-for-like sales were down 3.2% in Q4, but up 0.8% in the year. Q4 was impacted by the U.K. having the highest level of apparel sales mix in the group and apparel sales being weaker than footwear and by our decision to not fully participate in the elevated promotional activity in the U.K. Europe like-for-like sales were up 0.9% in Q4 and up 7.7% in the year. The apparel factor also impacted in Europe, where Southern Europe benefited from having a lower apparel mix than the North. Our strong JD-led store opening program meant organic growth was up 8.9% in Q4 and 15.3% for the full year. In North America, Q4 like-for-like sales were up 2.1% despite a promotional January and a 30% plus comparative last year. Store openings also drove strong organic growth of 7.7% in Q4 and 9.3% in the full year. And finally, in Asia Pacific, Q4 like-for-likes were up 8.3% and up 11.8% for the full year. New Zealand and Thailand performed particularly well. New store openings in this region also drove good organic growth with Q4 growth of 12.3% and full year growth of 17.7%. I'd also like to pick up a few strategic highlights. We opened 215 new JD stores in the year, hitting our ambitious targets in both North America and Europe, and we took full operational control of ISRG and MIG, allowing us to accelerate JD conversions in Southern and Eastern Europe and also enhance earnings. And we launched our loyalty program, JD STATUS in the U.K., and we have already around 800,000 app downloads. And finally, on the balance sheet, we ended the year with just over GBP 1 billion net cash on the balance sheet and inventory levels that we are comfortable with. I'd now like to update you on 3 forward-looking items, our initial guidance for FY '25, the change in accounting policy and new segmentation for FY '25. On guidance, we are guiding to PBT before adjusted items of GBP 900 million to GBP 980 million for FY '25. There are some key assumptions behind this, which I'd like to share. Firstly, we are assuming like-for-like sales growth will be between 1% and 4% growth, which reflects a range of market growth estimates we are seeing across market participants. The current market remains challenging with less product innovation and elevated promotional activity, particularly online across our markets. The outcome will depend very much on the rate of improvements in the market environment and product innovation across our markets as the year progresses, with any improvements likely to be in the latter part of the year. As such, given comparatives, Q1 and H1 like-for-likes are likely to be softer with H2 stronger than H1. Secondly, we anticipate new space to be around 5%, slightly higher than FY '24 due to a marginally earlier rollout of new stores through the year and the second year benefit of the elevated store opening program in FY '24. This would take organic growth range guidance from 6% to 9%. To complete the picture, on total sales, there will be a circa 2% reduction from the FY '24 disposals that we have made and around a 1.5% reduction from the 53rd week. Thirdly, while positive LFLs and our store opening program will improve profit, we do continue to see the impact of inflation, not least high national minimum wage increases, and that's not just in the U.K. but across a number of our markets. In addition, PBT will be impacted negatively by around GBP 30 million from a number of other factors. We're increasing our investment in cyber and tech, much of which now falls into operating costs. We lose the benefit of the 53rd week, and we'll see an impact from the non-trading of top ISRG and MIG stores as we accelerate the conversion to the JD brand having taken full control of those businesses. Beyond that, we will continue to have the dual running costs that we have talked about maintained at similar levels through FY '24. We expect this continued investment to start delivering clear financial benefits as we move into FY '26. We're just 7 weeks into the new year. So the only comment we'll make today on current trading is that we are trading in line with our expectations. We will report on Q1 at our full year results at the end of May. Now on to accounting policy. We will be moving amortization of acquired intangibles into adjusted items, putting us in line with the majority of large U.K. listed retailers. This will be in place for FY '25, and the main impact will be to increase PBT by around GBP 55 million. Consequence of this is that our guidance for FY '25 will move to GBP 955 million to GBP 1,035 million. This is how we will talk about it in the future and how you should think about the range for FY '25 going forward. And on segmentation, we will be changing it from FY '25 to better align the operating segments with our long-term strategic plan. We will provide historical information at our full year results to help you start remodeling to reflect the new strategy. Finally, I wanted to update on our reporting schedule. Coming into the group, I have reviewed how and when we communicate. And as a result, we will be moving to a more regular reporting cycle with quarterly trading statements. The proposed timings are in the release. We're aiming to announce our prelims at the end of May. This is later than we would expect in the future, but this year reflects the impact of me as a new CFO and a new auditor in what is a large and complex group. So that's it for me. I hope you found this useful. So now I'll hand back to the moderator, and we're ready to take any questions you may have.

[Operator Instructions] Our first question comes from David Roux of Bank of America.

Well done on good results today. I've just got 3 questions from my side. The first one, could you perhaps just touch on the phasing between 1H and 2H with regards to like-for-like and then also PBT? I think historically, you've spoken about PBT in 1H being about 35% to 40%. The second point is just on the store cadence. 215 stores is a decent number, but it's still a bit below the midterm target of 250 to 350. Should we still be expecting that as achievable over the medium term per annum? And then my last question is just down to the GBP 30 million incremental cost that you flagged. How much of this should we see a temporary and will reverse in FY '26?

Okay. So picking up on the first half, second half point. If you look at our comparatives, well, from last year, we had an incredibly strong Q1 with like-for-likes of sort of mid-double digit, around 15%. And the comparatives then get softer as you go through the year. So that will play to things being tougher in the first half and then easier in the second half as comps get easier. As we look through to the rest of the year, one of the things I think that we're seeing at the moment is a weaker product cycle. As we move into H2, we'll have the Olympics and some sporting events like other sporting events like the Euros, which always help to boost performance. And then we do start to expect to see some product innovation starting to play through. The timing of that, to be fair, David, is, I think, it's not a when, but just -- so it's not an if, it's just a case of when and when it comes in H2. So in terms of the sort of uptick in the second half, that will be partly dependent on when that comes through. PBT-wise, as you're right, we've typically had around 35% in the first half and 65% in the second half, 20% of our sales and about 1/3 of our profit is made in the peak season. We'll provide more updates on that as we get to the full year results and have a better view of how things are panning out. On the store cadence, 215 stores, that's JD. We're also opening stores under other faces, Shoe Palace and DTLR and Sprinter in Spain, among others. So that does take the tally up. And of course, I think the overall store rollout does include franchises and we'll start to see some of those coming through this year, smaller numbers at this point in time, but that will start to build now that we've also signed the South African franchise agreement. And then in terms of the GBP 30 million. Sorry, one sec. Part of that is the 53rd week. So if you break it into third possibly for a simple calculation, David, clearly, we won't have a 53rd week for the next 2 years. The investment in cyber and IT OpEx, I think, will continue for a part of time. What we're now seeing is that a lot of what we do around those areas because of sort of cloud type arrangements end up as license fees and operating profit rather than CapEx. The nontrading around Sprinter and MIG, I expect that to fall away, and we will start to see the benefits of that as we convert those stores into JD into FY '26. We are also expecting to see some of the double running costs that we've been talking around, around GBP 10 million, GBP 12 million, falling away in FY '26 as the supply chain programs that we've been running starts to land under the new structure we're putting in place.

And we're now moving on to a question from Jonathan Pritchard of Peel Hunt.

Two, if I may. Firstly, Dominic, you just mentioned the product pipeline. Maybe for you, maybe for Régis, but could you just give us a bit more granularity, how much you like what you see? Obviously, you can't just bring in new innovative product overnight. So how does that pipeline look and perhaps break that down into footwear and apparel, if you can? And then secondly, more strategically, I know we touched just now on store openings. But just going back to that Capital Markets Day last February, has anything in what's happened in the last 3 to 6 months, markets toughening, et cetera. Is anything that tipped over from sort of short-term tactical to longer-term fundamental to make you think that perhaps some of those targets, et cetera, and comments are no longer applicable? Are there any areas where things genuinely you think have changed?

Yes. Let me take the 2 questions. I think that -- no, I think if we have to do the strategic day today, I think we will do exactly the same. I think the strategy is about building our market share across Europe and U.S. And I think that we have seen the return on our investment in opening doors in both countries. So I think that remains the priority around JD, I think, is the right thing to do. And I think we will see the benefit coming. And I think that we see how much it simplifies the group. We see the growth that's coming from the transfer of store from other fashion to JD. So that's a key part of the strategy that has been put in place. After that, when we shared the strategy, we were doing plus 15% like-for-like. Today is a more challenging like-for-like because the market is more challenging. So I think that's the only difference. But that is mainly a reflection on Nike being a little bit slow -- bank too much on 2 key franchises, which are still our #1, #2 product, but franchisees that are starting to erode and consumer wanting new stuff. And I think that we always say that we believe our customer is resilient as soon as we bring in a new product innovation. And when I'm saying innovation, this is fashion. So it's about color, material. It's not about finding a new technology that transforms the world. It's about having new silhouettes. And I think that's a good example of that is the excellent work that Adidas is doing on Samba and all the Terra trend. I think they bring -- every month, we have new release of the same silhouette, but with a little bit of twist and other stuff, and that's working very well. It works very well with size, which is for us an early sign of this coming for the market. I think Nike has been banging on Air Force 1 and Dunk, and I think it's still selling very well. But I think we can see that they're starting to slow down and need something new to come and to refresh that. And I think that what we are seeing for your first question on footwear, I think we are seeing all the small brands, if I may, coming with a lot of innovation being very hot. I think Nike has been -- and they recognize it's slow. And I think that they put their act together. We launched yesterday Air Max DN, which is a good launch and something that brings something to the product. We see some product coming for end of the year, mostly beginning of next year that are exciting the buyer and quite exciting. So I think it's -- the most important thing was for Nike to recognize that they need to bring something new. And I think it has been done publicly last week. So I'm not saying something different. And I think as soon they put their act together, they have a strong brand, they bring that. On apparel -- so that's footwear. On apparel, I think that we see that fleece is lacking of interest from the consumer. That -- we still don't know how much was driven by the fact that the weather was very hot during -- across all the winter, so we didn't have low temperature, which I think has an impact on that. But I think there is something around the material. We see wool and other material going much better. So I think we see that. I think that Nike, the same has recognized that. We are very excited about in the second half having a woven version of the tech fleece. So that will be exclusive to us because it's something we ask Nike to change the material. So I think that we see that happening. So I think it is about bringing new products. And when we say innovation, this is fashion. So it's about silhouette, it's about material color. It's not about finding a new technology that no one has seen before. So it's about building a story for the consumer and for the consumer to feel that there is something new for them. But our plan remains the same, triple double-digit growth. As you have seen, we delivered double-digit growth in athletic leisure last year. So that's happening. Double-digit margin, I think that where we will -- we are building the infrastructure that will take more time than we expect because I think the infrastructure needs more investment than what perhaps I initially think about it. And double-digit market share, it's happening. This is now the case in some countries in Europe. We are getting closer to that in U.S. So I think we are committed to deliver that.

And up next, we have Monique Pollard from Citi.

The first question I had for Régis is just on whether you can take us through your Nike allocation for the second half of -- well, your '25, second half of calendar '24, just given Nike's comments last week at their results that they were scaling back products of legacy franchises in the second half of '24 in anticipation of new products being rolled out next year. And the second question, just following up on your comments on the Nike Tech Fleece. Obviously, at the January trading update, we'd heard that, that one Nike Tech Fleece product was responsible for 70% of the apparel shortfall, but that you'd come to a new agreement on pricing. Just wondering if that pricing change that you've made to that new version of the Tech Fleece has seen at least some improvement in the trading for that product? And then the final question I had was just on the like-for-likes. So I mean, in the statement, you talked about the January like-for-likes being down, but mentioned that the comp was plus 25%. You've talked about obviously the Q1 like-for-likes being -- the comp there being plus 15%. But just wondered if there were any specific differences month-to-month or whether we should think of sort of February, March, April all being about a plus 15%?

Monique, we lost you for a second. Can you hear us, Monique?

Yes, I can hear you. Can you hear me?

Could you just repeat? Do you want to let Regis answer the first 2 questions, and perhaps if you come back with your third again, and then we'll pick it up? You broke up in the middle, unfortunately. Thank you.

So Tech Fleece, I think, yes, it has been improved. I think that we have a better run from the time we have adjusted price. I think that we have done some markdown activity, too. So I think that's something where we are now in stock where we believe we should be. In terms of allocation, I think this is always something where you need to understand that we have a 3 years plan with Nike, and we have secured allocation for the coming 3 years. So there is no -- when they say they reduce allocation, I think it's mainly around smaller retailer, big retailer will be always have what we need to have. So I think there is no issue. And I think that what they mentioned is more a global strategy around the franchise that is around resetting the franchise. So I think that is more around the D2C operation, smaller retailer. But concerning ourselves, we have what we want to have in terms of Air Force 1 and Dunk. So there is no issue for us.

Excellent. And my final question was just on the like-for-like. In the statement, you said that the comp for January was plus 25% and you said that the 1Q like-for-like comp was plus 15-ish. Just wondering if that 1Q comp was pretty even February, March, April?

Okay. Thanks, Monique. I understand that now. It varied through the quarter. And I think one of the factors is that when -- for example, when Easter moves from 1 month to another, you end up with different phasing year-on-year. So I think we need to look at Q1 in the round...

Plus Ramadan.

Plus Ramadan, yes, because that does have an impact on some of our markets. So we have to look at Q1 in the round. So difficult sort of to call it completely after 7 weeks. I think given the comparative, given the -- what we talked about on product innovation, what we've talked about in terms of promotional market and in places like the U.K., we actively [Technical Difficulty] online, I think sort of a flat result in Q1 would be a good May.

And up next, we're moving to Grace Smalley from Morgan Stanley.

The first one would just be on the like-for-like guidance for this year. Could you help us with what you're embedding in terms of the growth between growth in units versus your expectation for pricing and then just product mix given the different performances you're mentioning by brand? And then secondly, just on promotions. So you said that the current environment remains challenging. It's still promotional, in particular, online. That seems to be happening despite the fact that the inventory backdrop is improving. So could you just elaborate on what you think is driving the promotions and your confidence in the ability to kind of wean the consumer off promotions given it was very promotional last year and kind of pull back on promotions while improving the like-for-likes as you move through the year?

Yes. So I think on the like-for-like, I think that it's driven by -- so the like-for-like, as you say, we guide between 1% to 4%. I think that 1% is what most of our competitors have said externally, 4% is what the market -- so some of the monitor data is coming to. So we believe that we usually outperform or we have outperformed significantly our competitor in the past. At the same moment, we want to be -- we want to -- we have been burned by being too optimistic. So we want to be conscious about the market we operate, and we want to make sure that we are delivering what we say we will deliver. So I think that's why we guide more to the 1% to 2% because that's something that we feel very -- we feel comfortable about it. I think that it could be better than that. In terms of how it looks, in terms of -- this is it is more driven by a different mix. So it is almost half price or half average transaction value, which is mainly driven by a mix, which is going more to footwear than apparel. So it's not about the price that's going up. It's more the mix because, as you know, footwear is driving a higher average transaction value than apparel, and we see more strength in footwear than apparel, and that is consistent with what we have seen in the end of last year. So I think it's mainly driven by volume and a little bit of mix that is driving the ATV up. In terms of promotion, I think the promotion is mostly driven -- I think that as you've seen most of the brand update was around the fact that stock in the market is in the right place. We are in the right place. We believe that most of our competitors are now there. I think online promotion is more driven by some of the D2C and some of the pure player trying to buy sales because they struggle to deliver the objective in terms of sales online. And I think it's -- that's why it's very focusing on online and it's focusing on a dying business model, which is a pure player model. I think we see the last chance or last drop of those, and that's the only way they can differentiate themselves from the market is by doing promotion and selling cheap compared to the rest of the industry. So that is, I think, less and less the case because they get less and less capital and they are more and more struggling. I think on D2C, it's more driven some brands need that in order to drive their top line. So that can happen time after time. But I think it was reassuring to have Nike saying that they will reduce their allocation to D2C and make sure that they are more disciplined around the pricing and promotion online.

And our next question now comes from Warwick Okines from BNP Paribas.

I've just got 3 quick ones, please. The first is that in your answer a moment ago, you talked about potentially an opportunity to open more DTLR and Shoe Palace stores. I wondered if your thinking had sort of changed about the opportunity for that. Secondly, I think wondering if you could just comment on the HOKA trial that you've been running in the U.K., where that could be more broadly rolled out. And thirdly, if you could just update us about the status of the Courir acquisition, please?

Okay. So I didn't get the third one.

Update on Courir.

Okay. So I'll take it. DTLR and Shoe Palace, no, I think it's a reflection of the success of our community brand. I think we -- they have opportunity to open more doors. We have a new format with DTLR that works well. So I think it's the same strategy. I think in the U.S., we are clear on our strategy. There is JD for the A and B mall, the high street. This is a brand that we want to build in the U.S. that I think is bringing something completely new in the U.S. market with a stronger mix in terms of apparel with a much more modern look and modern feel. And I think we see a fantastic response, and we see the brand growing weeks after weeks, and we really development of JD in the U.S. At the same moment, there is a market in the U.S., which are more community, which is -- if I make the difference between the 2, JD is a destination, the A and B mall is the store you take your car. It takes you half an hour, 45 minutes to get there, and you enjoy a fantastic experience. And at the same moment, especially in the U.S. as -- you should always remind yourself that the per capita is double in the U.S. compared to Europe. So there is a market for the store down to -- that you shop every day that you walk to the store, and that is what our community store are doing. And I think we do a pretty good -- a very good job with Shoe Palace on the West Coast, DTLR on the East Coast. And I think that we are gaining share, and we continue to develop this format because we believe it's an answer to the consumer that wants to buy the sneaker close to the home at a 15 walk. So that's for DTLR and Shoe Palace. So nothing new. It's just that we get more allocation from Nike to develop more of those 2 formats because they see that very successfully, and they want to back up our development. Ultra is a fantastic brand. I think it's a good start in Liverpool. I think it's -- we will -- we keep investing in new brand. We keep developing new product. And I think it's something we will leverage if there is a customer demand. So that's -- it's an answer to customer demand, but we -- this show how much innovation we are bringing to the market, how much our buyers are always sniffing for the last things coming and being able to convince the brand to come on to our environment because our environment is the best environment they can find to develop their brand and to have an experience for the consumer. On Korea, Korea is a time to get through Europe. I think that Europe is great on regulation and making business difficult to do. I think that this is life. So it's answering all the questions that they are asking us. It takes time. We will get there. It's just a question of timing.

Yes. We'll update you when we have news, Warwick.

And our next question now comes from Richard Chamberlain from RBC.

Question probably for Dominic, I think. I think in the statement, you say that you ended the year with over GBP 1 billion of net cash. Last year, I think it was around GBP 1.4 billion, GBP 1.47 billion, something like that. So I guess it's come down quite a bit year-on-year. But I wondered if there are any timing adjustments sort of weighing on that cash position at the year-end? Or actually is the cash position sort of likely to be comfortably over GBP 1 billion? That's my first question. And I just wanted to ask what's behind your assumption of low to mid-single-digit market growth. I think you said that you based on a number of sources. But obviously, that's down quite a bit from the CMD last year. And I just wanted to confirm that you're not expecting to outperform the market on a like-for-like basis for the coming year.

Yes, Richard, thank you. So on the first question, yes, we finished the year with just over a little over GBP 1 billion net cash. It is down from GBP 1.4 billion last year. No timing issues of any materiality. Remember that we did buy out the minorities of ISRG, EUR 500 million and the minority of MIG Eastern Europe. So those effectively played to reduce that cash. We continue to fund our CapEx out of free cash flow, but there are working capital investments required as we grow our store base. So I think the main factors are really around those 2 minority share buyouts, the largest of which was ISRG. Looking to the growth, we talked about 1% to 4%. And what informs that? I think when you look at the Euromonitors and the others commentated, they're all sort of in that sort of mid-single digit, just up to mid-single-digit growth. When you look at what players in the market are saying, there have been some recent announcements in the U.S., I'm sure you'll be more than aware of, they're talking about very low single digit, even 0 in some cases. And I think picking up Regis' comment, we have typically outperformed the market. So therefore, that's why we felt that 1% to 4% is a good sort of range coming into the year. Sitting here today, what are the factors that are going to drive that from the 1% to the 4%. I think clearly, we have strong comparatives in Q1 and therefore, H1. We see it more back-end weighted. I think our comparatives get easier. There are the sporting events. I think the big determinant will be how that product innovation that Regis was talking about starts to come through in the second half. I think it's a case of when, not if. But if it's later in the year, then I think we're probably more likely in the lower part of the 1% to 4%. If it comes and starts to resonate with customer probably in the higher part. A bit too early to tell at this point in time, Richard, if I'm honest. So I think sitting here today being prudent, we're probably at the lower part of that 1% to 4% range just for the reasons that I've mentioned. And then going back to the CMD, I think at the time of the CMD, as Régis said our like-for-likes were strong. But I think it's important that the market was doing well. All external commentators that I've seen at that time are looking at sort of mid-single-digit compound growth for a period of time. And if you take our Capital Market Day targets, it was effectively for double-digit growth, which with mid-single-digit like-for-like and 4% plus space growth over the medium term, you soon get to that double-digit number. I think what's changed is that the underlying market has been softer than anyone expected, particularly in sort of the latter half of the last financial year and coming into this financial year, which is a combination of product innovation being slower. I think we've seen a customer that, therefore, our customer is resilient. It does have discretionary spend, but it will focus and spend that money when it's something interesting to buy rather than just the normal product. So I think all the indicators we see is that this is cyclical and that as the market returns more to the norm that people forecast, there's no reason why we shouldn't be heading back to those sorts of targets that we talked about at the Capital Markets Day.

Great. That's very helpful, Dom. And just to go back on the cash point, you're not seeing -- or you're not expecting any sort of working capital build around year-end or sort of timing differences on...

No, Richard, no.

And we're now taking a question from Kate Calvert from Investec.

Three for me, please. The first one, can we go back to Nike's call last week? They did very much talk about putting sport at the heart of their business and wanting its key wholesale partners to elevate their proposition. Now you're less focused on sports and obviously, some of the other players are more focused on sports. Do you think that Nike's refocus might have to change the way JD thinks about the way it goes to market in the U.S. in particular? Second question is on your FY '25 guidance. Could you give some more detail on your underlying assumptions by region, please? I assume the U.K. profits are going to decline. But what are your sort of thinking currently around the U.S. and Europe? And my third question is, could you say what the profit benefit in FY '24 is from the 53rd week?

Okay. I will take the first one and Dominic, the other. I think that -- I think what Nike was saying, and I think it's true is that they are about sport. And I think it's always something we recognize, and I think we value because that's where their roots are. We are about lifestyle, and we are doing something different. And that's why looking at big picture, why JD has been such a great partner and why Nike has been such a great partner to us is because we're doing something different. They are about sport, we are about lifestyle. But lifestyle is the biggest part of the market today, and it has been the one that grew much faster than the rest. And I think that -- so for us, this message about Nike around sports is more around bringing back to the woods. A good example for me is air. Air Max is one of the key franchise we have is nowadays almost only a lifestyle one, and I think it's missing to have a sport element of it because I think that sports is bringing innovation, bringing new silhouette. And after that, it's transformed to lifestyle. And I think what is lacking today and what they recognize, and I think the message they give to the public is to say we need to make sure that we innovate in sport in order to translate that in lifestyle, to create it in lifestyle. And I think we are exactly in the same place. So I think it's not something -- I think we will benefit from that. And I think what they mentioned around elevated experiences in sports area because I think they feel that the sporting goods player are not doing as good job as we are doing in the lifestyle. And that's the same. I think it's a key challenge I have to all the sporting goods player around the quality of what they deliver to the consumer and the quality of the experiences. So I think that they are really happy about the experience with us. I think we are the #1 partner in the world. So I think that for us, this is more on music to our ears goods retail arena and them being back to their roots and make sure that there is a composite of sport in what they do for the consumer.

Okay. Picking up your question on guidance. We're not giving detailed guidance by region. Obviously, report against that as we go through the year. But picking out the main regions, our growth is driven in the U.S. and Europe. They will be the main sort of growth markets next year, and we expect to see profit improve on the back of that. In Europe, we should see a marginal improvement in profit margin, but actually with some of the conversion costs and other things, double running costs that we have, we'll start to see that profit margin improvement as well as absolute profit improvement coming more in FY '26 and beyond. U.K., we're 30% market share. This is not a growth market in the same way for us. And in a more depressed market, yes, particularly when you've got things like national minimum wage increases, the investments we're making in some of the areas around tech and cyber, we could see the profit go back. We probably expect to see the profit go back in the U.K. in this financial year. And then your last question was around the profit impact of the 53rd week, sort of GBP 10 million to GBP 15 million.

There appears to be no further questions at this time.

Okay. Well, thank you all very much for joining our call this morning. It's good to catch up. We look forward very much to speaking to you again towards the end of May when we will provide our full year results in full. Thank you very much.