JD Sports’ UK/European distribution strategy was driven by Group growth and Brexit. It became impractical to continue servicing Europe from Kingsway with a strategy to double UK & European capacity set out at a capital markets event in October 2021. More recently, a US strategy has been added. Currently, there are 3 key projects ongoing in UK, Europe & US, which will deliver valuable efficiencies and improved service standards to the Group. Derby is now the UK’s dedicated online fulfilment warehouse and is due to fulfil most of JD’s UK online orders over peak 2023, having gone live pre-peak 2022. This will relieve pressure on Kingsway, which will just focus on UK stores once Heerlen is up and running in 2024. Heerlen, the opening of which is key to moving towards double-digit European margins, will be the Group’s primary European distribution centre, fulling store and ecommerce. It starts taking delivery of stock pre-Christmas 2023, will commence delivery to store early 2024, and online early 2025. This will reduce Brexit-related cost and replace the 3PL DC at Menan. North America has a 5-year strategy focused on upgrading to the latest automation technology and moving to an integrated logistics network servicing all its US fascias from 3 main distribution centres, rather than 3 centres servicing individual fascias. It also plans to add more capacity in Canada to support the growth. Next news: January trading update. Short term concerns over a US slowdown in particular are weighing on the shares. We believe the valuation (CY24E PE 8.9x) is very undemanding for a business well-positioned to deliver double-digit growth p.a. over the life of its 5 year ‘JD First’ strategy.