A compelling growth strategy focused on accelerating the growth of the JD brand globally JD Sports held a successful capital markets event yesterday where Regis Schultz, who was appointed CEO in September 2022, set out a 5 year growth strategy which rightly focuses on accelerating the growth of the JD Brand globally. This is based on 4 pillars: 1) JD brand first; 2) Complementary concepts which covers the growth of Shoe Palace and DTLR (US community brands), IRSG (Sprinter) in Iberia, Go Outdoors (UK), Size?/Footpatrol (Early adopter concepts) as well as developing a better offer for women, for example; 3) Beyond Physical Retail which covers improving its online service proposition to best in class and creating a proper omni-channel business; 4) People, Partnerships and communities: This is about developing music and gaming partnerships via the app; developing a loyalty card programme in the UK and Europe; working closely with its brand partners such as NIKE. Financial targets seem achievable. Plenty of space to go after with US and Europe the key growth drivers There are 4 financial targets: 1) Double digit revenue growth on average; 2) Double digit market share; 3) Double digit operating margin at PBT line (FY23E 10.2%); 4) cash generation of £1bn p.a. to fund capex of £500m-£600m p.a.. JD’s expansion plans are focused on the US and Europe with plans for 250-350 JD stores p.a.. Growth is mainly organic driven, though management does still have an appetite for meaningful acquisitions. There is a longer-term opportunity to build scale in Asia (ex-China) and eventually think about LATAM. The Middle East and Africa are seen as franchise opportunities. Valuation (CY24E PE 13x) undemanding for a high quality, sustainable double digit growth story, in our view JD Sports is already a well-tuned growth machine, having delivered material growth historically. Management did a great job at demonstrating the multiple growth and efficiency opportunities to go after. While it will take time to step-up the growth pipeline, with management’s guidance for FY24 unchanged, delivery of this strategy should drive upgrades to consensus in outer years (revenue growth 6-7% p.a. source: FactSet). With so much white space to go after in its existing markets, we view JD as a sustainable growth story, more than capable of delivering teens growth per annum for the foreseeable future.