Acquisition of Footasylum prohibited by the CMA and disposal required This is disappointing news, particularly as Footasylum was struggling financially pre-acquisition given its lack of scale and its trading would certainly have been materially impacted by COVID-19 as a store-based retailer. JD is carefully considering whether to appeal the decision. If unsuccessful, the CMA requires the disposal of Footasylum. Clearly, given how much the competitive environment has deteriorated and the accelerated structural shift online likely post COVID-19, it is highly unlikely that JD will recoup anything close to the original £90m acquisition cost in our view. No change to Group forecasts We had assumed no profit contribution from Footasylum in our forecasts. Internationally business starting to reopen, though small as a percentage of Group. UK and US stores remain closed JD’s stores have been reopening in Germany and the Netherlands. Management previously indicated that footfall is down, as to be expected, though conversion is better. Its Asian business continued to trade through the pandemic. JD has continued to trade online, which historically accounted for c.20% of Group sales. Adidas (NR) recently reported that its online business was up 35% in Q1, up 55% in March and up triple digit in early April. Demand is clearly there for athleisure, based on what Adidas and other retailers have reported, so we would not be surprised if JD Sports has benefitted similarly, though the bulk of its profits are generated in-store. Sufficient financial headroom to cover a 6 month store closure As highlighted in our recent note, Positioned to resume growth , our cash burn model suggests that JD Sports has sufficient headroom to cover a 6 month shutdown. JD confirmed it has £1.25bn of debt headroom when it released its COVID-19 update (24th March) and we estimate the cash burn at c.£132m a month, which does not include any financial aid that it may be able to access in its international markets. The valuation (CY21E PE 13.8x) looks undemanding for a business we believe is well positioned with its market-leading, multi-channel proposition able to quickly resume its historic double-digit growth trajectory. We expect the athleisure market to rebound relatively quickly following months of customers being cooped up and we do not expect the brands to flood the market with surplus product.