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

Thank you for standing by. My name is Janine, and I will be your conference operator for today. At this time, I would like to welcome everyone to the JD Sports Fashion Plc Q3 '25 call. [Operator Instructions] I will now turn the call over to Mr. Dominic Platt. Please go ahead.

Good morning, everyone, and thank you for joining this JD Sports Fashion Plc Quarter 3 2025 Trading Update Call. I'm Dominic Platt, Group CFO. And with me on the call is Régis Schultz, our Group CEO. Hopefully, you've had a chance to see our statements earlier this morning. On this call, I will give a brief summary of the statement, and then, we'll hand it over to you for questions. And then, we will start with a high-level overview. It's fair to say that our quarter 3 trading has been mixed. We had a strong back-to-school period with overall trends across August and September in line with what we saw in Q2 and against similar comparatives. This was then followed by a much softer October. We continue to demonstrate our operating discipline in a highly promotional environment and also to make progress on our strategy. As a result, although the market remains volatile, we are well positioned ahead of our key peak season with respect to ranging in inventory. Turning now to go through trading in more detail. We delivered organic sales growth of 5.4% with all segments achieving organic sales growth, driven by new space growth in JD and complementary concepts and by like-for-like growth in sporting goods and outdoor. Our store opening program accelerated in Q3 with 58 new JD fascia stores and a further 21 conversions, taking us to 181 new JD stores in the year so far. We're comfortably on track for our target of 200 by the year-end. We will continue to monitor the program against our 3-year payback hurdle and actual paybacks are in line with that. Moving on to like-for-like sales. These were affected by a number of factors, including softer consumer demand and trading towards the end of the period, reflecting a number of factors: a more cautious consumer, tightening their purse strings ahead of peak, some distraction in the lead up to the U.S. election, recent data has shown a decline in general merchandising consumption in the lead up to the presidential election, unseasonably warm weather and enhanced promotional environment where we exercised our commercial discipline and didn't participate fully, which inevitably impacted sales. One thing I would note is the consumer seems to be ever more event-driven these days. We've typically performed well during these events, as we did through back-to-school, but October is essentially a month without any key events, and it's increasingly a month when consumers start gearing up for Black Friday and the peak season, which is inevitable impact on consumer demand. Overall, this resulted in like-for-like sales down 0.3% for the quarter. Year-to-date, like-for-like sales were up 0.5%. From a channel and category perspective, we continue to see similar trends that we have talked about previously. Firstly, footwear continues to outperform apparel. Apparel is more weather-dependent, for example. And in some weeks of October, we saw a 50% increase in the sale of T-shirts. And secondly, we saw stores continue to outperform online. With the greatest discounting being seen online, we've maintained our promotional operating discipline to focus on our long-term commercial strategy. We're a full price business, and we remain focused on protecting long term rather than driving short-term sales. And you'll see this promotional and operating discipline evidenced through our gross margin rate, which was 48.1%, up 0.3 percentage points compared to the corresponding period last year, and that's including Hibbett. As I've mentioned previously, Hibbett is a lower-margin business. So excluding this, the group gross margin would actually have been up 0.4 percentage points on a like-for-like basis. On the subject of acquisitions, as a reminder, we will give more information on our plans for Hibbett and the U.S. business at the Capital Markets Day in March 2025. In addition, you may have seen earlier this week, we satisfied the last of the conditions associated with the Courir transaction. And so now all that is left to do is to complete the transaction with the vendors. As a result we are hopeful we can complete the deal as early as next week. Finally, turning to our thoughts on the outlook for the rest of the financial year. The trading environment has been volatile through the year, and we've seen that particularly through our most recent trading month, October, as I've explained already. The consumer has responded well to key trading events, and we have traded well in those events ourselves. And while the volatility makes it hard to call in terms of what we can control, we are well positioned for upcoming key peak trading season in terms of ranging proposition and inventory. So in terms of guidance, for the past 6 months, I've consistently said that we expect to be in the bottom half of the guidance range of like-for-like of 1% to 4%, which then ties to a PBT guidance of GBP 955 million to GBP 1.035 billion. We remain on track, but following October trading, we can now be more specific, and we can say that we expect the full-year PBT to be at the lower end of that range. In summary, against the volatile backdrop, we've continued to deliver on our strategy, rolling out new stores to drive organic growth, and most importantly, demonstrating consistent approach to operational execution across ranging, stock levels and margin. As a result, we believe we are well positioned as we head into the peak season. That's it for me as an introduction. I hope you found this useful. And now I'll hand back to the moderator for any questions that you may have.

[Operator Instructions] Our first question comes from the line of William Woods from Bernstein.

3 if I may. The first one is just, obviously, in November, are there any signs that you can give on current trading, how you're seeing the customer respond throughout November and anything in the lead up to Black Friday? And the second one is on Hibbett. Obviously, you've had the business for a couple of months now. Are there any learnings or any information that you can provide on how Hibbett is performing or how comfortable you are with that acquisition? And then the third and final is just on the brand mix, are you seeing any signs of recovery in Nike or any slowdown in Adidas?

Thanks, William. And just on -- I'll take the first one, and then, Régis will pick up on the second 2 points. In terms of current trading, I think, as we've said consistently through the year, we need to look at quarters in the whole. So given this is a key peak trading for us, we will update on November, December when we update in January.

On EBIT, I think that is performing in line with our expectation. I think that it's a great team. I think that it works. The team are working well together. We are building the plan, and I think we will have further update in March when we will do our CMD. So I think that -- but early days, all good. On the brand mix, no change. That has not been -- there is no material change in Q3 compared to the first half.

Our next question comes from the line of Jonathan Pritchard from Peel Hunt.

2 for me, please. Just on my rough math, I think you need about 2% like-for-like to get yourselves to the way you're guiding to in profit. The exit rate was obviously a bit lower than that. So what gives you confidence that things will pick up in the fourth quarter? And then secondly, the national insurance charge, et cetera, can you tell us -- just quantify that perhaps for us and where you think you might get mitigation and how much of that you might mitigate?

Jonathan, sorry, a little bit quiet there. So look, I think as we go into Q4, there are a number of things to take into account. We're operating against much softer comparatives. It's minus 1.6% in Q4, where it was around just under 3% for Q3. We're anniversarying the beginning of the sustained promotional activity that we've seen over the last 12 months. It began around peak, so Black Friday last year. I think that what we've seen this year, and we've said this before, it's been a volatile year. What do we mean by that? When it's good, it's good. When it's quiet, it's quiet. I think we saw the quietness very much so in October, but things like back to school, summer sale, U.S. tax rebate period, we've seen good engagement from customers, and we've been successful with that. We're now about to enter into the peak trading season, Black Friday and peak trading. So we feel that, that will play well to our strengths. And then from an operational perspective, we feel well set up in terms of our ranging, in terms of proposition we have, our inventory levels. So I think taking all that in terms of what we can control, we're well positioned going into the peak season. On national insurance and national minimum wage, I think the overall impact for us is around GBP 30 million for our U.K. business, about half on the national minimum wage and about half on national insurance.

Yes. And just to add on the Q4, I think that Dominic will say it, I think it's -- at peak time, we have been managing and performing well. So we feel good about that. And I think that we feel good about where the stock -- where we are in terms of stock, so -- and I think that we are -- and the weather change in the U.K. So we're starting to have cold weather, which is helping.

Our next question comes from the line of Warwick Okines from BNP Paribas Exane.

I've got 3 questions, please. The first is that Europe traded a fair bit better than the other regions. Perhaps you could explain the dynamics there. Secondly, is there any reason or logic to slow down your conversion activity in light of the difficult market dynamics? And thirdly, perhaps you could just update on working capital guidance. I think at the full year, some time ago, you talked about a GBP 100 million to GBP 200 million outflow. Just wondering if you could give us an update for year-end.

I will take the first 2, and Dominic will go through the working capital. Europe, I think, multiple factors. I think back-to-school is a very big period for us in Europe, bigger than in some of the territory, and then, we performed very well. France has been doing fantastically well out of the Olympic games. So I think that has been driving the performance in Europe. Don't forget in Europe, we are gaining share. So I think we -- so compared to summer to U.K., we are gaining share. And I think that our mix is less dependent on apparel. So the weather impact is less. But I think that's explained, and we have -- we annualize quite a lot of openings. So we are in second year. So that explains the performance in Europe. And there was no election compared to the U.S. It's really interesting that -- we didn't believe that it -- the U.S. election usually has no impact on consumption, but we have seen some data from Circana that show almost a double-digit decline for the last 2 weeks before the election in U.S. on general merchandise, which -- that has not happened in Europe. And on conversion, there is no reason to change our program. I think that it's -- we -- our discipline in terms of payback is the same and the returns are the same and consistent. So -- and the major program on conversion, as you know, is in the U.S., where we're converting Finish Line to JD. And if there is one thing that is happening to this period is more to think about accelerating it because JD is performing well. I think that Finish Line has been performing less well. And I think that we can see -- when you are -- we are -- at the beginning of the year, it was a tipping point where JD is now much bigger than Finish Line. And I think we see the heat around Finish Line diminishing and the heat around JD increasing. So I think it's more -- it will -- I think it's more a reason to accelerate our conversion plan than anything else.

Yes. And a word just on the working capital, I think the guidance I've given is around GBP 100 million, GBP 150 million, and I'm still comfortable with that at this point in the year.

Our next question comes from the line of Clive Black from Shore Capital Markets.

Firstly, just following on from the answer to Warwick's question. Could you maybe talk a little bit more about, therefore, your market share position in both the U.K. and the U.S.A.? And then secondly, I just wonder, are we seeing a more fundamental change in your U.S. market conditions to the extent that the experience of the last quarter may actually characterize what's going to happen in the next 9 months before we start annualizing again? I just wanted your thoughts on the U.S. market here on.

Yes. U.S., so we are gaining share in U.S., and our market share is around 5%. It depends on how you define the market, but that's the type of thing. And we -- so as you know, on the U.S. market, we have not seen -- we have seen what we have seen in the last 12 months, which is the fact that we performed quite -- the market is performing well at peak period. And when it's -- there is nothing, especially because in the past, the market has been helped by Nike release of IE product during this period of no promotion or nothing specific. That is not happening. Nike has reduced the number in order to recreate the heat around Jordan, has reduced this weekly or biweekly drop of product. And has an impact in terms of creating traffic, creating excitement in the marketplace, and that has not happened anymore. So that's something we have seen that will continue, but now we are starting to annualize that. We will see some IE products for the key holiday period. So we have some stock around, some Jordan, IE product and some Nike IE product. So I think we have not seen something in the U.S. market that will change that. I think the key question will be Elliott is now on board. We are meeting him, in fact, today in London. I met him 2 weeks ago. I think he is putting together his plan. I think it's -- and what will be the impact of this plan will be perhaps something that we need to scrutinize on that. But -- and I think that it's, for me, all good news in terms of the relationships, in terms of the way of thinking, the way of working. So we feel really good about what will happen in the U.S. market following the appointment of Elliott.

And -- sorry, just, again, following up on Warwick's question. Can you just remind us also what you think Courir brings to the business in 2025?

So I think that it's early days, so we will close the deal next week. So that's the good news. I think we'll update you in due term. So we -- because of the process and how it works in Europe, we have not -- we have been focusing on making the deal happen more than looking at the numbers. So that gives us a little bit of time to finalize it, and we'll come back to you.

Our next question comes from the line of [ Anne Pretloe ] from Berenberg.

My first question is about the promotional market. I'm just wondering if you think the more promotional sports market is the new normal. Or do you think this is just temporary and linked to the excess inventory that was built up at the end of the pandemic? And then my second question is about sporting goods and outdoor. It performed very well. So I just wondered if you wanted to highlight any star concepts or product categories here?

On the promotional activity, I think that there are 2 things in it. There is one thing which has been the push by the previous management of Nike around online B2C. And I think that it moved from a genuine push to a non-genuine push where you start to buy, sell by doing promotion. And I think that's something which I'm sure it will be reviewed by the new management. And I think that should reset the market. So that's really the big things around promotion. It has not been driven by excess inventory because after funding, in fact, we didn't have inventory. So there was no promotion at one point of time if we go back. I think the market will go back to a normal promotion activity when the market leader will reset its B2C strategy and online, especially in terms of that element of the mix because it was a push for push. And I think that, that has been impacted all the market. And you can see in our numbers, the online is suffering more than offline and which shows that. So I don't think that it's a new normal. I think it's more linked to part of the market, plus some of the pure player in Europe, which has been -- especially in U.K. has been going out of business or have been really struggling and using promotion as the last way to create some cash because they get -- they are running out of cash. So that's on the promotional activity. On sports and goods, I think, as you know, we integrated completely ISRG last year, and we have been focusing the team on developing our business in Iberia. Before that, they were doing too much in trying to make things happen in the Netherlands. We closed the Netherlands. We focused them on Iberia, and I think it's proved to be the right thing to do. They are performing very well. And I think that they're gaining a lot of share in the Spanish market, which is what we wanted to do, and this was the reason why we bought the majority of this business. So that's the highlight. Outdoor has been a reflection on the fact that we have quite a lot of rain. And every time it's raining, it's a good news for outdoor because you need waterproof product.

Our next question comes from the line of Alison Lygo from Deutsche Numis.

So 3 for me, if that's okay, please. The first is on kind of promotional intensity and discipline. So you've been really clear that you decided to retain your discipline on pricing and not participate in promo. Wondering if you could just talk a bit about what might change your stance on that and whether you see a risk that you might end up with stock you can't clear? Like where is the tipping point in just kind of trading through if the environment sort of stays as promotional? And then the second one, sort of linked to that, is whether you need to hit the low end of like-for-like guidance for that 1% to deliver on the low end of PBT guidance or whether you've got some levers to pull if like-for-like is a little bit softer across the fourth quarter? And then just finally, whether there's any update in your expectations for CapEx and net debt for the year-end?

I'll take the first one, and Dominic will go through the second and third. Our promotional discipline, as you rightly pointed out, is linked to our stock management discipline because we cannot be disciplined on promotion if we are not on stock. And I think that we have demonstrated for the last 12 months or 18 months that -- and for the last 10 years that we are world-class in terms of managing our stock and having the right stock at the right time. So we are not concerned by that. And I think that once again, we have been adjusting that. So -- and we are entering our promotional -- we are not doing -- no promotion. We are doing promotion at the time that consumer is expecting and all the market is expecting promotion. We are entering a promotion window, which is Black Friday, plus after that, you will have the sales. So I think we will continue -- we are not at all in -- so we are in a good position. We have the stock to go through holiday period through this promotional activity. So we feel really good and to be able to continue with our discipline. And I think that if there is one point where we could have been in a question will be October, but we have been able to manage our stock in a way which didn't -- which allow us not to participate to some of the promotion, which was more, I think, to buy sales than to deal with inventory. I think that's the level of inventory in the market. It's in an okay place. I think it was more 1 or 2 players trying to make their quarter number by trying to buy sales by doing minus 20% on Nike, which we didn't want to participate.

Alison, just to pick up your second 2 questions. In terms of hitting the low end, that would imply around 2% like-for-like in Q4. Clearly, we're operating against a negative 1.6% like-for-like, which is a significant step down from where we've been in Q2 and Q3. Within normal bounds, there were levers, of course, but -- and in terms of what we control -- what we can control we feel we are well set up for the peak season. And in terms of CapEx, it's between GBP 550 million and GBP 600 million is where we expect to land, and that does include Hibbett, which clearly is incremental to what the guidance we set at the beginning of the year.

Okay. Any -- sorry, any update on net debt or just...

Sorry, I missed -- I forgot that one. I am sorry, apologies. Yes, we expect to be around sort of 0 net debt on a cash basis, not including leases.

Our next question comes from the line of Richard Taylor from Barclays.

3 questions, please. Firstly, on inventory. Where about are you year-on-year in terms of inventory growth? And to what extent have you flexed this given October trading? Have you invested ahead of peak or have you been slightly more cautious? And also just on the quality of our inventory, please, as you trade towards peak. Secondly, keen to know to what extent you're through rebalancing your store portfolio layouts in response to changing performance by the brands? And finally, can you just remind us of the weighting for Q4, please, in terms of both revenue and profit?

Okay. So in terms of stock, I think we are ahead of last year, but linked to the number of stores. So I think that if you divide that by store, we are in line with last year stock position, even a little bit better in U.K. So I think we feel confident that we have the right stock and that we have the stock that's needed for the season. So that's on your question around stock. In terms of flexing space, we always said we flex space every day. So our store manager has the ability to flex the space based on return and based on stocks that they have on hand. So we have no issue whatsoever. Our walls are completely flexible. So we are flexing based on our buy and based on our sell-through. So this is something that we have as a discipline. Something that is not well known, we are arranging store by store. We are one of the few retailers in the world that range each store differently based on the consumer and based on the sell-through around different products. So this is -- give us all this flexibility to adapt to change trend to product it and to make sure that we always have the right stock and the right product in the right store for the right consumer. So this is really part -- one of the biggest part of the success of JD is this ability to range store by store that we have developed over the time and that we continue to do and that gives us a great discipline in terms of stock management and in terms of sales optimization.

And then on the weighting, Richard, revenue is around 30%, 35% for the fourth quarter, and profit is about 35%, 40%.

Our next question comes from the line of Richard Chamberlain from RBC Capital Markets.

2 from me, please. So it sounds like the stores outperformed the online channel over the period. And I think you've mentioned you -- they're liberally refraining from promo activity online unlike some players, but did that have much of a positive margin mix impact during the quarter? And then the second is, maybe Régis, can you give us an update on the warehouse automation and just sort of general warehouse developments that are going on, on the Europe side? Is the automation still on track for to come through early next year?

I'll start with the warehouse. I think, yes, the warehouse is performing in line with our expectations for peak period. We are working on the automation. This automation will be beginning of next year. So all on track and all moving right. As you have seen, we have a new leader in supply chain that joined us now in July and is making very good progress in terms of making sure that we have the plan in place in order to deliver the full benefit of our European warehouse.

And on the mix of margin, you're quite right, Richard, the stores performed better than online through the period. And when we talk about promotional activity, it typically tends to hit the online channel more, and that's where we take more disciplined action in terms of our pricing and maintaining margin. But what it does mean is you have lower sales online as a result. So net-net, sort of slightly lower performance online, albeit a slightly better margin does mean you have a bit of a benefit to the margin overall, if that makes sense.

Our next question comes from the line of Daniel Isaacs from 36one.

And just a question on the like-for-like and expenses moving into next year, especially given the budget, if we hang around the low single-digit like-for-like level, maybe expenses tracking 4% to 6%, I mean, how are you thinking about margin, potentially margin contraction moving into next year?

We're working through our budgets for next year at the moment. Clearly, we've got some headwinds coming our way with the recent announcement about national minimum wage and national insurance in the U.K., and we'll update on that early in the new year.

But don't forget that U.K. is 25%, 30% of our business. So it doesn't impact our full business. It's really a U.K. story. It doesn't impact U.S., and it doesn't impact Europe, so that's something you need to keep in mind.

Okay. And sorry, just one more. You mentioned the Jordans that you are annualizing the reduced Jordan drops. Nike is obviously also looking at their Dunk and Air Force 1. Have you noticed any significant change in drops that could affect you from now going forward?

No, not really. I think that -- we have seen this on Jordan, especially because they want to reduce the number of products put on the market in order to recreate the brand. That has been the major impact we have seen in the quarter.

Our next question comes from the line of Anubhav Malhotra from Panmure Liberum.

Most of my questions have been answered. I just have one more. Can you give us an update on the rollout of the loyalty program, how that is progressing, and also the online proposition improvement that you were doing in Europe?

So -- our STATUS program has been -- we are continuing to work well in the U.K. We started to implement in France, and we will go to the other and in Poland, and we'll do the other country in the coming months after peak. So that's still working well and still progressing very well. We have now more than 2 million people in U.K. part of the program, and it's starting to get to the same level of penetration in France than we have in the U.K. Concerning our e-com platform, as you know, we have decided not to go live before peak. We will go live January in Italy, and that will be the starting point of the rollout. So we are on plan to be that. We didn't want to take any risk for peak.

[Operator Instructions] Our last question comes from the line of Kate Calvert from Investec.

I've got 3 questions, 2 on the states. So the first one is, was there any material variation in performance across your fascias in October? The second question is that I do know it's quite hard to break out impacts, but in the U.S., how big an impact do you think the consumer caution was ahead of the election versus the ongoing sort of promotional activity, weather issues? And my final question is just a bit of a clarification on your guidance. Can you confirm that the profits and net debt guidance you've given is ex Courir? And given that the Courir completion is pretty imminent, could you capture, say, 30% to 40% of the typical annual profits before your year-end from Courir in your numbers?

Okay. So I will do the U.S., and Dominic will go through that. So U.S., I think that what we know -- so the different fascia has been performing the same way, so there is no major difference between the fascias that we have. There is a big -- if there is one difference is JD has been performing better, especially compared to Finish Line. So that's a big one, which is my -- the answer to your question around the conversion. We see that Finish Line is suffering much more than the rest of our fascia and which is normal because we have reduced our investment and we are moving. And that's the reason why we should accelerate the program around conversion. In terms of the evidence of the different things, it's always difficult to put a number. I think the big number we have seen, and we -- is the Circana number around general merchandise in the U.S., which has been around plus 3% and has been minus 9% for the last 2 weeks of October, so around high single digit. So that's the trends we are seeing. After that, it's always difficult to put everything together and to split the different impacts, but definitely, that has been a big impact for everyone in the U.S.

And Kate, thanks for the question on Courir. The PBT guidance doesn't include Courir. And your -- thank you for picking that up. In terms of the net debt guidance that, that in my mind did. So yes, that's assuming that we've acquired Courir before the year-end. So thank you for helping me clarify that. And in terms of capturing 30%, 40%, I don't -- there's an element of arm's length that we have because of the competition authorities about where current trading on Courir is. But I think the information we had pre the deal because everything is quite so skewed to peak as our existing business. But inevitably, we will if we complete it early next week, capture some of the trading through the back end of November, December and January.

So more like 30%, more towards the bottom end.

More towards the bottom end, I imagine, yes.

Our next question comes from the line of Peter Testa from One Investments.

I have 3, please. I was wondering just on your comments about October and election in the U.S. being unusual. Did you notice, for example, on the communication strategy issues of crowding out, i.e., it was very hard to get communication to drive traffic to drive sales, so the communication strategy was interrupted in the North American business?

No. I think, frankly, we didn't believe in it. And we had the Circana number yesterday -- or 2 days ago, and we saw that it was significant for everyone. So I don't think it's about communication. I think it's about people just not thinking about buying a pair of sneakers at the same moment of thinking about the election. But that's -- facts and figures is coming from Circana numbers.

Okay. And then when you look at the U.K. and U.S. business, can you give us a sense as to what you saw in terms of volatility in traffic versus conversion in the retail business?

In fact, everywhere we saw the same thing, which is a lower traffic. And I think that's driven partly by the weather, partially by election, budget, whatever. And partly, I think, in U.S. by the [indiscernible] launch that we had in the past, which was creating traffic around the weekend that we were launching the product, and we didn't have those types of launches in October. We will be back on the calendar in November and December. So that's coming back, but this was not happening in October.

Okay. And then last one is just on retail performance. Maybe if you could give a sense as to what Finish Line is as a percentage of U.S. sales now and whether on a retail basis in the U.K. and U.S., you saw on a store base like-for-like, was it positive?

So Finish Line will be on our U.S. business, my guess, 20% of our business.

Yes, it's about half of our JD business, yes.

Yes, yes. So that will be to answer your question on Finish Line.

And for the quarter, stores were positive. Online was negative.

Our last question comes from the line of Geoff Lowery from Redburn Atlantic.

Just 2 slightly bigger picture questions, if I can. I'm slightly confused about the messaging around Nike and DTC in the sense that your business grew very strongly across a period where Nike was prioritizing DTC. Now the digital part of Nike is shrinking and yet you seem to be impacted by the shrinking rather than a period when it grew quickly. What are my -- what am I missing there? And then my second question, over the last couple of years, you appear to be a bit more sensitive to promotions around you as in you're having to make decisions about sales versus gross margin maintenance. Why are you more sensitive? Do you think as a business to the sort of external promotion environment than you were through history? Is it about geography or product mix? Or what am I missing there?

Okay. So 2 things. I think that on the D2C, I think that the D2C is the reflection of how Nike is performing in total. And I think that when -- so -- and it's a significant part of our mix. So Nike -- if Nike is doing well, I think, yes, this has been always for us an important part of it, and it was because of the brand hit and the product hit and we benefited from that. So that's -- so the fact we are not competing with D2C. I think we are -- and I think that it's recognized more and more by Nike that we are providing something to the consumer, which is different and which is what the consumers like more because it is omnichannel experience. I think that the -- what is impacting us is if Nike is on promotion of online, and that has an impact because it impacts the perception of the product by the consumer, it impacts negatively the brand and impact by impacting negatively the brand or the franchise that is on promotion, impact our ability to sell full price. That's what we are saying. Is it clear the way I explained it?

Yes.

Okay. So that's what it is. So I think that we -- and on promotion, why we have been more impact because most of the promotion on the last quarter has been around Nike. When it was promotion on other brands, we get less exposure because we get less exposure to Nike. So that's why promotion impacted us more this time. Nike is a full price business. And I think that -- and that is what they aim for and that, that should be happening. But I think that the last quarter, we have seen a lot of promotion on D2C and some of our competitors have been following by promotion across the board.

That concludes our Q&A session. I would now like to turn the call over to Dominic Platt for closing remarks.

Thank you all for joining this morning and listening to our update on the Q3 trading, for all your questions. We're now turning our mind to the peak trading season, and we look forward to speaking to you again in January. Thank you.

Thank you.

Thank you for joining the conference call today. You may now disconnect.