JD Sports Regulatory News (JD.)

10 September 2019

JD SPORTS FASHION PLC

INTERIM RESULTS

FOR THE TWENTY SIX WEEKS TO 3 AUGUST 2019

JD Sports Fashion Plc (the "Group"), the leading retailer of sports, fashion and outdoor brands, today announces its interim results for the 26 weeks ended 3 August 2019 (comparative figures are shown for the 26 week period ended 4 August 2018).

a) Net cash consists of cash and cash equivalents together with interest-bearing loans and borrowings

b) Throughout this release '*' indicates first instance of a term defined and explained in the Glossary at the end of these interim results

Group Highlights

·; Group revenue increased by 47% to £2,721.2 million (2018: £1,846.3 million) with strong total like for like sales* growth in global Sports Fashion fascias of 12% including highly encouraging growth of more than 10% in the core* UK and Ireland Sports fascias

·; Another record result for the half year with Group EBITDA on a comparable accounting basis increased by 37% to £235.2 million (2018: £171.8 million) and profit before tax and exceptional items on a comparable accounting basis increasing by 36% to £166.2 million (2018: £121.9 million)

·; Reported profit before tax increased by 6.6% to £129.9 million (2018: £121.9 million), after net adjustments of £7.6 million following transition to IFRS 16 'Leases' and exceptional items of £28.7 million

·; International development of JD continues with:

a) Net increase of 23 JD stores across mainland Europe

b) Net increase of seven JD stores in the Asia Pacific region

c) Six JD stores now trading in the United States with the physical stores now complemented by a trading website

·; Encouraging performance from the Finish Line fascia in the United States with operating profit before exceptional items on a comparable accounting basis of £34.7 million (2018: £4.8 million for the seven weeks post acquisition) with like for like sales growth for the proforma 26 week period across the combined Finish Line branded stores and website of 5%

·; Key financial information of the two business segments is tabulated below:

Period to 3 August 2019

1 This is a non-trading charge relating to the amortisation of various fascia names and brand names which arise consequent to the accounting of acquisitions made over a number of years.

2 The Group consider that net funding costs are cross divisional in nature and cannot be allocated between the segments on a meaningful basis.

Period to 4 August 2018

·; Result for the 26 weeks ended 3 August 2019 reflects the application of IFRS 16 'Leases' for the first time. The Group has adopted the modified retrospective transition approach to this new accounting standard with the result to 4 August 2018, which reflected the application of IAS 17 'Leases', not requiring restatement. On a consistent accounting basis, the proforma headline profit before tax and exceptional items to 3 August 2019 under IAS 17 'Leases' would have been £166.2 million being £7.6 million higher than that reported under IFRS 16 'Leases'

Peter Cowgill, Executive Chairman, said:

"I am very pleased to report that this has been another period of significant progress for the Group with revenue growing by 47% to £2,721.2 million (2018: £1,846.3 million) and the headline profit before tax and exceptional items increasing by a further 30% to £158.6 million (2018: £121.9 million).

"Against a backdrop of widely reported retail challenges in the UK, it is extremely encouraging that JD has delivered like for like sales growth of more than 10% with an improved conversion reflecting consumers' increasingly positive reaction to our elevated multichannel proposition where a unique and constantly evolving sports and fashion premium brand offer is presented in a vibrant retail theatre with innovative digital technology. JD also continues to gain momentum in Europe with a further double digit increase in total like for like sales and a net increase of 23 stores in the period.

"We are pleased by the continued positive trends to date in the second half in Sports Fashion whilst recognising the tougher comparatives ahead.

"Notwithstanding the ongoing uncertainty with regards to Brexit, the Board is confident that, without the impact from the transition to IFRS 16, the Group would have been on track to deliver headline profit before tax for the full year at the top end of market expectations which currently range from £402 million to £424 million. However, after adjusting for the impact of the transition to IFRS 16, we would expect to deliver results at the mid-point of expectations. We remain encouraged by our prospects for further growth."

Executive Chairman's Statement

Introduction 

I am very pleased to report that this has been another period of significant progress for the Group with revenue growing by 47% to £2,721.2 million (2018: £1,846.3 million) and the headline profit before tax and exceptional items increasing by a further 30% to £158.6 million (2018: £121.9 million).

The result for the 26 weeks ended 3 August 2019 reflects the application of IFRS 16 'Leases' for the first time. The Group has adopted the modified retrospective transition approach to this new accounting standard with the result to 4 August 2018, which reflected the application of IAS 17 'Leases', not requiring restatement. On a consistent accounting basis, the proforma headline profit before tax and exceptional items to 3 August 2019 under IAS 17 'Leases' would have been £166.2 million being £7.6 million higher than that reported under IFRS 16 'Leases'.

This result includes a contribution of £35.7 million (£34.7 million on a proforma basis under IAS 17 'Leases') from the combined Finish Line and JD business in the United States (2018: £4.8 million for the seven week period post acquisition).

JD (UK and Republic of Ireland)

Against a backdrop of widely reported retail challenges in the UK, it is extremely encouraging that JD has delivered like for like sales growth of more than 10% with an improved conversion reflecting consumers' increasingly positive reaction to our elevated multichannel proposition where a unique and constantly evolving sports and fashion premium brand offer is presented in a vibrant retail theatre with innovative digital technology. We ensure that the JD proposition retains its dynamic appeal and forges deeper connection with its consumers through the continual investment in our physical store portfolio, digital platforms and creative marketing. We also recognise the importance of having flexibility and relevance in our third party brand line up with an increasing number of premium brands attracted to JD's market leading proposition.

We are very aware of the financial benefit that other retailers appear to get when they downsize their estates and, whilst we have no plans to fundamentally alter the size of the JD store network in the UK at this time, we continue to seek fairness and flexibility in the terms of our leases.

JD (International)

The JD fascia has also made further significant progress in its international markets with a net increase of 31 stores in the first half:

·; Europe: JD continues to gain momentum with a further double digit increase in total like for like sales and a net increase of 23 stores in the period with new stores in most of our existing territories together with our first JD store in Austria. The new stores in the period included the conversion of six former Chausport stores in France in locations where we believe that the JD proposition is more appropriate to the particular local market. The average size of the new stores opened in the period was 3,900 sqft (2018: 3,200 sqft) with the larger footprint a reflection of our increased confidence of consumers' appetite for the full JD proposition in these markets. JD now has a presence in 11 countries in mainland Europe and we are increasingly confident that JD is developing the same emotional resonance with consumers in Europe as it is in its core UK and Ireland market. We would expect to open a similar number of stores across Europe in the second half. We have also now committed on a flagship store in the centre of Paris on the Rue De Rivoli with fit out commencing in the new year.

·; Asia Pacific: There was a net increase of seven stores in the period with additional stores in Malaysia, Australia and Singapore. The relatively slower pace of openings in the period is purely a timing issue, reflecting the availability of property, and we would still expect to open more than 15 stores across the region over the full year. We continue to make learnings in all of our territories which we use to further refine our integrated digital proposition and, with the ongoing support of our key brand partners, we remain confident that further opportunities will prevail to expand the reach of our exciting and dynamic proposition in the region. Subsequent to the period end we disposed of the legacy Glue retail business in Australia which was becoming an increasing distraction. We do not believe that there will be any adverse impact on the development of JD in the country which is now well established with its own identity and operational infrastructure.

·; United States: We have now opened our sixth JD store in the United States after the conversion of the former Finish Line store in the Mall of America at Bloomington, Minnesota. These JD stores now have digital support following the launch of a trading website in May. These initial stores were deliberately chosen as we believed they would give us the greatest width of intelligence both geographically and demographically thereby helping us to shape our future strategy. We may convert an additional small number of Finish Line stores to JD in the second half to expand our market knowledge further although this will depend on receiving the necessary local planning consents in time to enable the conversions to be open ahead of the key holiday period. We anticipate further significant developments for JD in 2020 as we begin to open stores organically in the major metropolitan areas with work starting recently on the fit out of a flagship store in Times Square, New York which is currently scheduled to open in Spring 2020. We remain encouraged by the early performance of the apparel ranges which are now becoming increasingly representative of the JD offer.

Other Fascias

Away from JD, there are positive developments to report in our other Sports Fashion businesses:

·; Premium brand fashion (UK): We recognise the important role of our premium brand fashion businesses in elevating our offer to consumers and we continue to invest in both the stores and multichannel infrastructure to further enhance the consumer and brand experience. We have also completed a number of small selective complementary acquisitions in this area in the period to expand our geographical presence and provide us with additional brand authority. These include the acquisition of the intellectual property and trading assets relating to the highly regarded Pretty Green brand from its administrator for a total consideration of £1.5 million. This business is now more appropriately scaled with one flagship store in Manchester and a trading website complementing its wholesale operations.

·; Gyms (UK): Our Gyms business continues to increase in critical mass with a membership of approximately 120,000 members across 25 gyms. Works are ongoing at a further four sites with openings scheduled later in the year.

·; Sprinter & Sport Zone (Iberia): The process to integrate the Sport Zone businesses in Portugal and the Canary Islands into the Sprinter infrastructure is nearing completion. It remains our intention to retain the Sport Zone banner in Portugal although, as with Spain, we are transferring the stores in the Canary Islands to the Sprinter name with this process expected to be complete before the end of the year. We firmly believe that the rapid integration of Sport Zone into the Sprinter infrastructure has left the Sport Zone business well positioned for future positive development.

·; Finish Line (United States): We continue to believe that there is an opportunity to deliver a sustained improvement in the performance of the Finish Line business over the longer term with a focus on four key pillars:

1. Improving sales densities: We have now commenced a trial which is focussed on driving additional sales of apparel in stores through extended ranges. This project, which requires a modest capital investment in stores, is supported by the secondment of a number of key commercial personnel from the core JD business. We are encouraged by the initial performance of these new ranges which are now in more than 20 stores.

2. Improving product margins: We continue to support the Finish Line management team with a focus on buying disciplines and the intense management of markdown, leveraging from JD's strength and experience in these key commercial areas. We are pleased with the early progress in this area with product margins for the first half 0.5% ahead of the proforma equivalent period in the prior year.

3. Exiting underperforming stores: We have exited a further 10 Finish Line stores (excluding Mall of America which was transferred to JD) and 29 Macy's concessions in the first half. We would expect a similar number of Finish Line store closures in the second half.

4. Appropriate scaling of central overheads: We continue to work with the Finish Line management team on various initiatives including incentive schemes which are self-funded through growth in profitability.

Footasylum

In April we acquired the Footasylum business for cash consideration of £86.0 million with the Group also assuming net debt of approximately £7.8 million. At acquisition, Footasylum had 69 stores across the UK complemented by a highly regarded trading website which contributed approximately 30% of sales. This was a compelling acquisition for a number of reasons:

·; Footasylum has a complementary product range and customer demographic to the Group's core JD fascia with its casual fashion proposition being more fashion-led and appealing to an older consumer.

·; Footasylum offers an attractive and creative range of in-house / own label brands which will bring additional differentiation to the Group's brand portfolio. We believe that there will be opportunities to exploit these new brands internationally by leveraging from JD's extensive international reach.

·; Footasylum sells its in-house / own label brands on a wholesale basis and we believe there will be learnings which we can apply in expanding the wholesale business across the wider Group.

The acquisition of Footasylum is currently under review by the Competition and Markets Authority which has issued the Group with an enforcement order which obliges us to operate the Footasylum business separately until they have completed their review. We are complying and assisting fully with this process in order that it can be completed in the most timely and efficient manner.

Outdoor

This has been another challenging period for our Outdoor businesses overall and, whilst we are pleased with the positive trading and improved result in the Blacks and Tiso businesses, these gains have been overshadowed by a significant loss in the larger Go Outdoors business.

The Go Outdoors business has historically worked with a store replenishment model where branded suppliers delivered goods direct to store. We believed that this model resulted in an inflexible supply chain with weak product availability in stores at times of high consumer demand and that the stores would therefore be better served, and the consumer experience enhanced, with a central warehousing model for stock combined with a migration onto the Group's IT platforms, leveraging from JD's highly successful replenishment methodologies. We took possession of a 353,000 sqft facility in Middlewich, Cheshire in February with replenishment commencing from this facility, which is operated by a third party, at the end of April. Fulfilment of online orders has also now been transferred to this site.

There were a number of initial challenges arising from the execution of this change which had a significant impact on availability, replenishment to stores and online fulfilment in the key trading period of May and June. We have now resolved many of the issues and are more widely reassured over the longer term potential for Go Outdoors after the business delivered like for like sales growth in July.

We maintain our belief that this new flexible supply chain model, where we have greater control over the replenishment, will bring longer term financial benefits to Go Outdoors. Furthermore, we remain convinced that greater integration of the Outdoor businesses, with Blacks and Go Outdoors having access to one pool of stock with common merchandising systems will also provide the most robust and effective platform for the long term development of our Outdoor businesses. However, we believe it is prudent to allow time for operations in the new facility to further stabilise and so we have delayed the transfer of the Blacks stocks from Kingsway to Middlewich until early 2020.

Kingsway Warehouse Facility

Works to install the additional automation equipment in the 352,000 sqft extension at our primary Kingsway warehouse have now been completed. Commissioning of the site has now commenced and will be done in phases through the Autumn with this process expected to be substantially complete ahead of the peak trading period.

The disruption to operations which we experienced in the second half of the prior year has continued throughout the first half necessitating further frequent changes in operating procedures and additional levels of manual process. We have now been able to start reducing the level of manual working as we bring the site into operational use although, as a contingency, we will retain an element of this additional trained labour through the peak trading period.

Elsewhere, we have now commissioned a new operational section in Kingsway which will offer a more bespoke packing and fulfilment service to the trading websites of our premium fashion businesses. Whilst there is some additional cost associated with this, we believe that it is justified as it further elevates the experience to our premium fashion consumers and brand partners.

Sports Fashion

Sports Fashion has had another exceptional first half with profit before tax and exceptional items increasing by a further 43% to £182.4 million (2018: £127.7 million). On a consistent accounting basis, the proforma headline profit before tax and exceptional items to 3 August 2019 under IAS 17 'Leases' would have been £188.1 million being £5.7 million higher than that reported under IFRS 16 'Leases'.

We are delighted with trading in the first half with like for like store sales across our global Sports Fashion fascias (excluding Finish Line) increasing by 9% and total like for like sales, including online, growing by 12%. All regions for the JD fascia delivered significant like for like growth although we are particularly encouraged by the extremely robust performance in our core UK and Ireland market where total like for like sales (including online) grew by more than 10%. This was an excellent performance given the growth over the previous five years.

Elsewhere, JD continues to develop positively in its established European markets with increased investment in marketing helping to drive a further significant double digit increase in total like for like sales. Further afield, the combined JD businesses in the Asia Pacific region delivered total like for like growth of just under 10% although the earlier timing of Chinese New Year relative to last year did impact on the performance of the business in Malaysia in the early part of the period. We also continue to address some challenges on our operational execution in South Korea with our joint venture partners and, whilst these have had an adverse impact on the short term performance in this particular territory, we believe that the learnings will be useful when we are considering opportunities to expand the JD fascia into other geographies in the Asia Pacific region.

The combined Finish Line and JD business in the United States contributed £35.7 million (£34.7 million on a proforma basis under IAS 17 'Leases') in its first full half year as part of the Group (2018: £4.8 million for the seven week period post acquisition). On a proforma basis, compared to the same 26 week period in the prior year, total like for like sales for the Finish Line own stores grew by 3% which was complemented by a further pleasing double digit growth online as the business continues to exploit its clear strength in this area. We are also satisfied with the progression on gross margin for the period to 42.9% (proforma 26 weeks to 3 August 2018: 42.4%) as we start to see the benefits of the work to bring enhanced rigour to the buying and merchandising disciplines. Overall, we remain pleased with our acquisition of this business and are confident that the business, which remains under the joint leadership of the Finish Line CFO and JD's Global Retail Director, has a clear strategy and is well positioned for profitable development.

As anticipated, our overall results in Iberia have been impacted by a further loss in the Sport Zone business of £4.1 million (£3.9 million on a proforma basis under IAS 17 'Leases') (2018: £9.5 million) as we continued with the process to clear excess legacy stocks aggressively ahead of the transfer of operations to Sprinter's facility in Alicante.

The overall gross margin in Sports Fashion reduced to 47.4% (2018: 48.9%) largely from the inclusion of the lower margin Finish Line business for the full period. Whilst a high proportion of exclusivity and newness in the offer of the core JD fascia clearly helps to maintain margins, we fully recognise that the inventory must still be turned regularly. We will continue to drive this by managing the sellthroughs of ranges intensely with promotional activity that is selective, specific and relevant fully utilising the reach provided by our international store estate and portfolio of trading websites.

Outdoor

Our Outdoor businesses have had mixed trading in the first half of the year.

Extremes of weather continue to provide both opportunities and challenges to trading whether they be in the current period or when measured relative to the prior year. In this regard, we anticipated a challenging first quarter with tough comparatives following our exploitation of the favourable trading conditions offered by a more severe winter in the previous year. Ultimately, we exited the first quarter with a composite total like for like sales decline across stores and online of 6% (2018: Q1 total LFL growth +7%).

Trading in the Blacks and Tiso businesses then improved significantly through the second quarter. These businesses operate out of smaller space than Go Outdoors with less reliance on camping to drive footfall and sales in the summer season. Consequently, the cooler and somewhat wetter summer through the UK provided more opportunities for positive trading compared to the hot and dry weather of the prior year with both of these businesses ending the half year period with a total like for like sales growth across stores and online of 3%.

Go Outdoors had a challenging start to the second quarter with a significant double digit decline in total like for like sales in May consequent to the integration issues associated with the transition of fulfilment to the new warehouse at Middlewich. We are confident that the Go Outdoors business has retained the loyalty of its customers through these short term difficulties and that the business still provides people with the proposition and inspiration to make the most of their time outdoors. We are encouraged with the positive performance in July.

On a consistent accounting basis, there was a proforma EBITDA loss of £11.5 million (2018: profit of £2.9 million). However, within this, we are pleased that the smaller Blacks and Tiso businesses have both delivered small improvements in their first half EBITDA.

The overall loss before tax and exceptional items increased to £20.1 million (2018: £3.8 million). On a consistent accounting basis, the proforma headline loss before tax and exceptional items to 3 August 2019 under IAS 17 'Leases' would have been £18.2 million.

In the period, we recognised an exceptional charge of £20.7 million (2018: £nil) in relation to a partial impairment of the goodwill arising in previous years on the acquisition of the Go Outdoors business. We also recognised a charge of £4.4 million (2018: £nil) for costs arising on the integration and consolidation of the principal IT systems, warehousing and other infrastructure in Go Outdoors.

Group Performance

Revenue and Gross Margin

Total revenue increased by 47.4% in the period to £2,721.2 million (2018: £1,846.3 million). This includes £725.2 million of revenue from Finish Line and JD in the United States (2018: £180.0 million for the seven week period post acquisition). Like for like store sales for the period across our global Group fascias, excluding Finish Line but including the more established businesses in Europe, Asia Pacific and Outdoor, increased by 7% with the overall like for like growth for the same fascias, including online, increasing by 10%.

Total gross margin in the period of 46.9% was 1.3% lower than the prior year (2018: 48.2%). This primarily reflects the inclusion of the lower margin Finish Line business for the whole period. There was also a reversal of prior year non-cash fair value gains on forward contracts. Commercially, we maintain our strong focus on minimising discounting in the principal Sports Fashion businesses with an intensely analytical process to reviewing product performance.

Profit Before Tax

Profit before tax and exceptional items increased by 30.1% to £158.6 million (2018: £121.9 million). On a consistent accounting basis, the proforma headline profit before tax and exceptional items to 3 August 2019 under IAS 17 'Leases' would have been £166.2 million.

The profit before tax and exceptional items includes £35.7 million (£34.7 million on a proforma basis under IAS 17 'Leases') in relation to the Finish Line and JD business in the United States in its first full half year as part of the Group (2018: £4.8 million for the seven week period post acquisition).

There were exceptional items in the year of £28.7 million (2018: £nil) primarily from the non-cash impairment of intangible assets arising on the acquisition of Go Outdoors. These exceptional items comprised:

1. The impairment in the current period relates to the partial impairment of the goodwill arising in prior years on the acquisition of Go Outdoors Topco Limited. The carrying value of the remaining goodwill balance is sensitive to further changes in key assumptions.

2. Movement in the fair value of the liabilities in respect of the put and call options.

3. Costs arising from the integration and consolidation of the principal IT systems, warehousing and other infrastructure in Go Outdoors.

Group profit before tax ultimately increased by 6.6% to £129.9 million (2018: £121.9 million). On a consistent accounting basis, the Group profit before tax under IAS 17 'Leases' would have been £137.5 million.

Cash and Working Capital

The net cash balance at the end of the period was £118.1 million (2018: net debt of £85.1 million) with the further significant investments on both acquisitions, including Footasylum, and capital expenditure being funded by the ongoing strong cash generation in our core retail fascias.

Net stocks increased by £89.1 million to £913.2 million (2018: £824.1 million). This includes £47.6 million in relation to stocks in businesses acquired since 4 August 2018. The growth in stocks in the like for like businesses is consistent with the growth in sales and we maintain our robust approach to stock management.

Gross capital expenditure (excluding disposal costs) decreased to £69.8 million (2018: £91.4 million) with the decrease reflecting the fact that the significant investment to extend our Kingsway warehouse is nearing completion with spend in the period reducing to £2.8 million (2018: £28.5 million). The primary focus of our capital expenditure remains our retail fascias with a spend in the period of £41.5 million (2018: £44.0 million). This incorporates an increased investment in our international Sports Fashion businesses of £29.7 million (2018: £24.9 million). Away from Kingsway, other investment in infrastructure includes £2.5 million (2018: £2.5 million) at our warehouse in Alicante and £2.5 million (2018: £nil) in relation to the new warehouse for our Outdoor businesses at Middlewich.

We now expect that the capital expenditure for the full year will be in the range of £175 million to £200 million and we will continue to use our cash resources to make selected acquisitions and investments where they benefit our strategic development.

Store Portfolio

During the period, store numbers have moved as follows:

Sports Fashion Fascias

(i) Chausport (France), Sprinter (Spain), Sport Zone (Portugal, Spain & Canary Islands) and Perry Sport / Aktiesport (Netherlands)

(ii) Glue (Australia) and Hot-T (South Korea)

(iii) Being Finish Line branded concessions within Macy's department stores only.

There were also 25 JD branded gyms at the period end.

Outdoor Fascias

Dividends and Earnings per Ordinary Share

The Board proposes paying an interim dividend of 0.28p (2018: 0.27p) per ordinary share, an increase of 3.7%. This dividend will be paid on 3 January 2020 to shareholders on the register at 29 November 2019. We continue to believe that it is in the longer term interests of all shareholders to keep dividend growth restrained so as to maximise the available funding for our ongoing growth opportunities.

The basic earnings per ordinary share decreased slightly to 9.67p (2018: 10.05p) largely reflecting the higher participation of profits from the United States, with higher rates of corporate taxation, in the overall Group result.

The adjusted* earnings per ordinary share have increased by 25.1% to 12.57p (2018: 10.05p).

People

On 13 May 2019, Kath Smith joined the Board as an independent Non-Executive Director after having previously been the General Manager / Vice President of The North Face EMEA. With more than 20 years' experience in the sports brand industry, she will assist the Group to enhance its already well-established relationships with leading global brands.

The Group was promoted into the FTSE100 list for the first time on 24 June 2019. This is a very notable landmark for the Group which could not have been achieved without the commitment of all of our colleagues. Our increasingly global achievements have their foundations in the successful transfer of the JD DNA into local markets. Whilst I would particularly like to thank the numerous colleagues who have actively sought international secondments to help deliver this, I also acknowledge the invaluable contribution of the wider teams whose flexibility has made these secondments possible and who have ensured that the core business continues to progress.

Given the growth opportunities available to the Group, particularly with respect to our international development, we will continue to look to strengthen our senior management team where appropriate.

Corporate Governance Review

Following the Company's promotion into the FTSE100, the Board considered that it was an appropriate time to carry out a review of various matters which are important to the business and its shareholders from a corporate governance perspective. In addition, in the announcement released following the Company's AGM on 3 July, the Board committed to carrying out a review of its corporate governance practices. The Company has now commenced its engagement with shareholders in relation to this review.

Brexit

We recognise that there is heightened uncertainty surrounding the nature of the UK's exit from the European Union and we are very cognisant of the increased risk of a disorderly exit which could have potential adverse consequences on supply chains, tariffs, exchange rates and consumer demand.

The Group currently operates with a highly integrated stock management infrastructure for its stores across Europe where the stock requirement for the JD stores outside of the UK is aggregated with that of the UK stores with one consolidated order then sent to the supplier. All stocks are then delivered to the Group's primary Kingsway warehouse for onward fulfilment both to stores and to online customers.

The Group always expected that, for operational purposes, a European warehouse would be required sometime after 2021 with the risks associated with Brexit bringing this decision forward. We are working with our logistics partners to secure an initial 80,000 sqft of space at a facility in Belgium which will provide us with sufficient capacity to process launch product for footwear for the key brands. This facility would be available for use in early 2020.

Current Trading and Outlook

We are pleased by the continued positive trends to date in the second half in Sports Fashion whilst recognising the tougher comparatives ahead.

Notwithstanding the ongoing uncertainty with regards to Brexit, the Board is confident that, without the impact from the transition to IFRS 16, the Group would have been on track to deliver headline profit before tax for the full year at the top end of market expectations which currently range from £402 million to £424 million. However, after adjusting for the impact of the transition to IFRS 16, we would expect to deliver results at the mid-point of expectations. We remain encouraged by our prospects for further growth.

We will next provide an update on trading in early January after our key Christmas trading period.

Peter Cowgill

Executive Chairman

10 September 2019

Condensed Consolidated Income Statement

For the 26 weeks to 3 August 2019

Condensed Consolidated Statement of Comprehensive Income

For the 26 weeks to 3 August 2019

Condensed Consolidated Statement of Financial Position

As at 3 August 2019

Condensed Consolidated Statement of Changes in Equity

For the 26 weeks to 3 August 2019

Condensed Consolidated Statement of Changes in Equity (continued)

For the 26 weeks to 4 August 2018

Condensed Consolidated Statement of Cash Flows

For the 26 weeks ended 3 August 2019