Half Year 2026 JD Sports Fashion PLC Earnings Call

September 23, 2026

Speaker #1: Good morning, ladies and gentlemen, and welcome to the JD Sports Fashion Plc HY27 results presentation. At this time, all participants are in listen-only mode. Later, we'll conduct a question-and-answer session between JD management and Southside analysts.

Operator: Good morning, ladies and gentlemen, and welcome to JD Sports Fashion Plc HY27 results presentation. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session between JD management and sell-side analysts. If you wish to ask a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Instructions will also follow at the time of the Q&A. I would like to remind all participants that this call is being recorded. I would now like to hand over to the CEO of JD Sports, Régis Schultz, to start the presentation.

Speaker #1: If you wish to ask a question, we ask that you please use the raised-hand function at the bottom of your Zoom screen. Instructions will also follow at the time of the Q&A.

Speaker #1: I'd like to remind all participants that this call is being recorded. I would now like to hand over to the CEO of JD Sports, Reggie Schultz, to start the presentation.

Speaker #2: Good morning, everyone, and thank you for joining us for our half-year results. I'm Reggie Schultz, CEO of JD Group, and I'm joined here today by Dominic Platt, our CFO.

Régis Schultz: Good morning, everyone, and thank you for joining us for our half year results. I am Régis Schultz, CEO of JD Group, and I am joined here today by Dominic Platt, our CFO. On the agenda for the presentation, I will start with a key message from the H1. Dominic will then take you through the financials and guidance before I return with an update on the business and our strategic progress. We will then open for Q&A. We delivered a resilient sales performance in the H1 against a backdrop that was challenging for our industry and for our customer. Youth unemployment and cost of living pressure both increased, while the footwear product cycle continued to evolve in a highly promotional market.

Speaker #2: On the agenda for the presentation, I will start with the key message from the first half. Dominic will then take you through the financials and guidance.

Speaker #2: Before I return with an update on the business and our strategic progress, we will then open for Q&A. We delivered a resilient sales performance in the first half against a backdrop that was challenging for our industry and for our customers.

Speaker #2: You've found that employment and cost-of-living pressures both increased. While the footwear product cycle continued to evolve in a highly promotional market, group organic sales were down 0.7%, including a 2.1 percentage point contribution from new selling space.

Régis Schultz: Group organic sales were down 0.7%, including a 2.1 percentage point contribution from new selling space, despite having over 100 fewer stores overall, in line with our strategy of fewer, bigger, and better stores. Our response to a maturing market and challenging trading condition is to control the controllables. That means focusing on our customer, bringing them the best, latest, and greatest product, investing in our omni-channel proposition, and maintaining tight discipline on our cost and capital. We are making clear progress against our strategic priority and delivered against significant milestones. We are investing to improve what we offer to our customer and to enhance efficiency and productivity of our assets. I will come back to this later. Our product proposition is strengthening and more resilient than ever. While footwear sales were softer overall, we are encouraged by the momentum in running, performance, and lifestyle, and newer footwear style.

Speaker #2: Despite having over 100 fewer stores overall, we have fewer, bigger, and better stores. Our response to a maturing market and challenging trading conditions is to control the controllables. That means focusing on our customer, bringing them the best, latest, and greatest product, investing in our omnichannel proposition, and maintaining tight discipline on our cost and capital.

Speaker #2: We are making clear progress against our strategic priority and have delivered against significant milestones. We are investing to improve what we offer to our customers and to enhance the efficiency and productivity of our assets.

Régis Schultz: We are making clear progress against our strategic priority and delivered against significant milestones. We are investing to improve what we offer to our customer and to enhance efficiency and productivity of our assets. I will come back to this later. Our product proposition is strengthening and more resilient than ever. While footwear sales were softer overall, we are encouraged by the momentum in running, performance, and lifestyle, and newer footwear style.

Speaker #2: I will come back to this later. Our product proposition is strengthening, and we are more resilient than ever. While footwear sales were softer overall, we are encouraged by the momentum in running, performance, and lifestyle, and newer footwear styles.

Speaker #2: Apparel and accessories increased to 36% of group sales, in line with our strategy and supported by a strong product lineup, supplemented by our own brand and licensed brand.

Régis Schultz: Apparel and accessory increased to 36% of group sales, in line with our strategy, supported by a strong product lineup, supplemented by our own brand and licensed brand, with faster and more agile reaction to customer preference. Online was another area of progress. Online sales grew by more than 5%, rising to 20% of group sales. This was supported by a continued rollout of our new e-commerce platform, Shopify and commercetools, which unlock new capability, expand choice, and service for our customer. Our discipline on cost and capital is again strengthening our balance sheet. Net cash improved by nearly GBP 300 million year on year, even after returning GBP 260 million to shareholder through buyback and dividend over the last 12 months. This is clear evidence of the high cash generation of our business. After all, cash is king, and cash is real.

Speaker #2: With faster and more agile reaction to customer preference, online was another area of progress. Online sales grew by more than 5%, rising to 20% of group sales.

Speaker #2: This was supported by a continued rollout of our new e-commerce platform, Shopify and Commerce Tool, which unlocked new capability, expense choice, and service for our customer.

Speaker #2: Our discipline on cost and capital has again strengthened our balance sheet. Net cash improved by nearly £300 million year on year, even after returning £260 million to shareholders through buybacks and dividends over the last 12 months.

Régis Schultz: Our discipline on cost and capital is again strengthening our balance sheet. Net cash improved by nearly GBP 300 million year on year, even after returning GBP 260 million to shareholder through buyback and dividend over the last 12 months. This is clear evidence of the high cash generation of our business. After all, cash is king, and cash is real.

Speaker #2: This is clear evidence of the high cash generation of our business. After all, cash is king, and cash is real. Finally, full year 2027 final guidance is unchanged from the Q2 trading statement.

Régis Schultz: Finally, our FY27 final guidance is unchanged from the Q2 trading statement. Profit before tax and adjusting items of between GBP 700 million to GBP 800 million, and free cash flow of GBP 460 million to GBP 520 million. This reflects both the market backdrop and also our continued focus on cost and capital discipline. I will now hand over to Dominic to talk through the financial in more details.

Speaker #2: Profit before tax and adjusting items of between £700 million and £800 million, and free cash flow of £460 million to £520 million.

Speaker #2: This reflects both the market backdrop and also our continued focus on cost and capital discipline. I will now hand over to Dominic to talk through the financials in more detail.

Speaker #3: Good morning, everybody, and thank you, Reggie. So let's start with our headline financials here on slide five. Unless stated otherwise, all my commentary is on a constant currency basis.

Dominic Platt: Good morning, everybody, and thank you, Regis. Let us start with our headline financials here on slide 5. Unless stated otherwise, all my commentary is on a constant currency basis. As Regis outlined, total sales were down 0.8% against a tough backdrop. Allowing for a small disposal in the prior year, organic sales were 0.7% lower. Net new space contributed 2.1 percentage points to sales, despite us having 106 or 2.2% fewer stores, demonstrating improving productivity in our new space. To complete the sales bridge, like-for-like sales were 2.8% lower. During the period, we maintained our trading discipline within a highly promotional market. To stay competitive and engage with our customers, we made controlled price investments, particularly in our online offer. The underlying impact of these investments on our gross margin was a reduction of 50 basis points. This was partially offset by higher marketing contributions year on year.

Speaker #3: As Reggie outlined, total sales were down 0.8% against a tough backdrop. Allowing for a small disposal in the prior year, organic sales were 0.7% lower.

Speaker #3: Net new space contributed 2.1 percentage points to sales, despite us having 106, or 2.2%, fewer stores—demonstrating improving productivity in our new space. And to complete the sales bridge, like-for-like sales were 2.8% lower.

Dominic Platt: To complete the sales bridge, like-for-like sales were 2.8% lower. During the period, we maintained our trading discipline within a highly promotional market. To stay competitive and engage with our customers, we made controlled price investments, particularly in our online offer. The underlying impact of these investments on our gross margin was a reduction of 50 basis points. This was partially offset by higher marketing contributions year on year.

Speaker #3: During the period, we maintained our trading discipline within a highly promotional market to stay competitive and engage with our customers. We made controlled price investments, particularly in our online offer.

Speaker #3: The underlying impact of these investments on our gross margin was a reduction of 50 basis points. This was partially offset by higher marketing contributions year-on-year.

Speaker #3: For accounting presentation purposes, the corresponding marketing costs that are funded by these contributions are classified in OPEX. Our statutory gross margin was therefore down 20 basis points year-on-year.

Dominic Platt: For accounting presentation purposes, the corresponding marketing costs that are funded by these contributions are classified in OpEx. Our statutory gross margin was therefore down 20 basis points year on year. Operating costs, excluding adjusting items and interest on lease liabilities, were 1.6% higher year on year, driven by costs related to new store openings. Excluding new space, like-for-like operating costs were flat year on year. More on that later. Overall, the group's operating profit, including lease interest, was GBP 294 million, 19.5% lower year on year with an operating margin of 5%, 120 basis points lower. This is typically lower than the full-year operating margin, reflecting the seasonality of our business with our key annual trading periods of Black Friday and peak Christmas and holiday season to come in the second half.

Speaker #3: Operating costs, excluding adjusting items and interest on lease liabilities, were 1.6% higher year on year, driven by costs related to new store openings. Excluding new space, like for like operating costs were flat year on year.

Speaker #3: More on that later. Overall, the group's operating profit, including lease interest, was £294 million, 19.5% lower year on year, with an operating margin of 5%, 120 basis points lower.

Speaker #3: This is typically lower than the full-year operating margin, reflecting the seasonality of our business, with our key annual trading periods of Black Friday and peak Christmas and holiday season still to come in the second half.

Speaker #3: After net finance expenses, which were 33% lower year-on-year, profit before tax and adjusting items was £282 million. Our adjusted earnings per share were 13.7% lower on a reported basis, at 3.97 pence, with the lower percentage reduction compared to profit before tax and adjusting items showing the economic benefit of our share buyback program.

Dominic Platt: After net finance expenses, which were 33% lower year on year, profit before tax and adjusting items was GBP 282 million. Our adjusted earnings per share were 13.7% lower on a reported basis at 3.97 pence, with a lower percentage reduction compared to profit before tax and adjusting items, showing the economic benefit of our share buyback program. For completeness, statutory PBT was GBP 241 million, 74.6% higher year on year. This reflects significantly lower adjusting items, which in the period principally related to the amortization of acquired intangibles. Our free cash flow performance in H1 improved by GBP 50 million on H1 last year. The free cash outflow of GBP 18 million reflects the usual seasonality of our business, with working capital outflows tending to peak in the middle of the financial year.

Speaker #3: For completeness, statutory PBT was £241 million, 74.6% higher year on year. This reflects significantly lower adjusting items, which in the period principally related to the amortization of acquired intangibles.

Speaker #3: Our free cash flow performance in H1 improved by £50 million on H1 last year. The free cash outflow of £18 million reflects the usual seasonality of our business, with working capital outflows tending to peak in the middle of the financial year.

Speaker #3: In line with our capital allocation framework, the Board has declared an interim ordinary dividend of 0.4 pence per share, representing one-third of the previous year's total dividend.

Dominic Platt: In line with our capital allocation framework, the board has declared an interim ordinary dividend of 0.4 pence per share, representing one-third of the previous year's total dividend. This represents an increase of 21.2% year on year. As of 1 August, before lease liabilities, we had net cash of GBP 168 million. As Reggie said, that is an improvement of almost GBP 300 million versus net debt of GBP 125 million a year ago. This slide demonstrates that JD is a well-balanced, diversified, and global business. As a measure of that global diversity, 76% of our sales came from outside the UK, from markets across North America, Europe, and Asia Pacific, and we have significant runway to further grow our market shares in these regions.

Speaker #3: This represents an increase of 21.2% year-on-year. And finally, as of the 1st of August, before lease liabilities, we had net cash of £168 million.

Speaker #3: As Reggie said, that's an improvement of almost £300 million versus net debt of £125 million a year ago. This slide demonstrates that JD is a well-balanced, diversified, and global business.

Speaker #3: As a measure of that global diversity, 76% of our sales came from outside the UK, from markets across North America, Europe, and Asia Pacific. We have significant runway to further grow our market shares in these regions.

Speaker #3: Our online sales penetration improved year on year to 20% of sales, with online sales up 5.2%, driven by good growth in North America, Europe, and Asia Pacific.

Dominic Platt: Our online sales penetration improved year on year to 20% of sales, with online sales up 5.2%, driven by good growth in North America, Europe, and Asia Pacific and well supported by the ongoing evolution of our online ranges and technology platforms. In the UK, online sales were flat year on year. The overall 20% penetration is an average, and it varies across the group, with the UK at 25%, 20% in North America, and in the high teens in Europe and Asia Pacific. This provides ample opportunity for growth, particularly outside the UK. As Regis Schultz will touch on later, we continue to make significant progress in building out our omni-channel proposition, strengthening our retail ecosystem to meet customers wherever and however they choose to shop and unlocking new capabilities to support higher traffic, conversion, and basket values.

Speaker #3: And well supported by the ongoing evolution of our online ranges and technology platforms. In the UK, online sales were flat year-on-year. The overall 20% penetration is an average, and it varies across the group, with the UK at 25%, 20% in North America, and in the high teens in Europe and Asia Pacific.

Speaker #3: This provides ample opportunity for growth, particularly outside the UK. As Reggie will touch on later, we continue to make significant progress in building out our omnichannel proposition, strengthening our retail ecosystem to meet customers wherever and however they choose to shop, and unlocking new capabilities to support higher traffic, conversion, and basket values.

Speaker #3: Organic store sales were 2.2% lower year-on-year, reflecting lower footfall outside key events, partially offset by improved conversion and the contribution from net new space.

Dominic Platt: Organic store sales were 2.2% lower year on year, reflecting lower footfall outside key events, partially offset by improved conversion and the contribution from net new space. Organic online sales were up 5.2%. Turning to category, our agile multi-brand model provides a diversified customer proposition through our footwear, apparel, and accessory ranges. In apparel and accessories, organic sales grew by 4%. Our apparel proposition is in excellent shape, and we continue to enhance our assortment across athleisure, performance, and streetwear. Apparel and accessories now represent 36% of sales. This is an average with lower penetration outside the UK. We believe there is significant scope for growth in this category, particularly in North America. In footwear, organic sales were 3% lower.

Speaker #3: Organic online sales were up 5.2%. Turning to category, our agile, multi-brand model provides a diversified customer proposition through our footwear, apparel, and accessory ranges.

Speaker #3: In apparel and accessories, organic sales grew by 4%. Our apparel proposition is in excellent shape, and we continue to enhance our assortment across athleisure, performance, and streetwear.

Speaker #3: Apparel and accessories now represent 36% of sales. This is an average, with lower penetration outside the UK. We believe there is significant scope for growth in this category, particularly in North America.

Speaker #3: In footwear, organic sales were 3% lower. Throughout the half, we continue to see a significant shift in the global footwear product cycle, given the transition between newer—but smaller in value—franchises and larger, end-of-cycle product lines.

Dominic Platt: Throughout the half, we continue to see a significant shift in the global footwear product cycle, given the transition between newer but smaller in value franchises and larger end-of-cycle product lines. We saw strong growth across brands less affected by this transition, and particularly with performance-based running silhouettes and newer footwear styles that Regis Schultz will touch on later. Finally, the share of our other category, which includes outdoor living equipment and JD Gyms memberships, increased to 4% of our sales mix. Turning now to our geographic regions, and starting with North America, where we saw a mixed performance through the H1. In Q1, trading was supported by key consumer moments, including the US tax refund season and product launches.

Speaker #3: We saw strong growth across brands less affected by this transition, and particularly with performance-based running silhouettes and newer footwear styles that Reggie will touch on later.

Speaker #3: Finally, the share of our other category, which includes outdoor living equipment and JD Gyms memberships, increased to 4% of our sales mix. Turning now to our geographic regions.

Speaker #3: And starting with North America, where we saw a mixed performance through the first half. In Q1, trading was supported by key consumer moments, including the U.S. tax refund season and product launches.

Speaker #3: Performance softened as Q2 progressed, reflecting weaker consumer sentiment due to incremental cost-of-living pressures, a slower quarter for high-heat footwear products, and the deferral of back-to-school demand into August.

Dominic Platt: Performance softened as Q2 progressed, reflecting weaker consumer sentiment due to incremental cost of living pressures, a slower quarter for high heat footwear product, and the deferral of back-to-school demand into August. Overall, for the half, North America organic sales were down 1.7%, and like-for-like was down 4%. Within this, our JD fascia delivered a more resilient performance versus our complementary businesses with like-for-like of -1.1%, supported by a relatively more diverse product proposition. Operating margin was 220 basis points lower year on year, largely due to deleverage impacts and the ongoing wind down of the standalone Finish Line business. On the deleveraging point, it is worth noting that our sales are typically skewed to the second half, given peak trading in Q4, which applies to all regions.

Speaker #3: Overall for the half, North America organic sales were down 1.7%, and like-for-like was down 4%. Within this, our JD fascia delivered a more resilient performance versus our complementary businesses, with like-for-like of minus 1.1%, supported by a relatively more diverse product proposition.

Speaker #3: Operating margin was 220 basis points lower year-on-year, largely due to deleverage impacts and the ongoing wind-down of the standalone Finish Line business.

Speaker #3: On the deleveraging point, it's worth noting that our sales are typically skewed to the second half, given peak trading in Q4, which applies to all regions.

Speaker #3: On Finish Line, which remains a significant but short-term factor, this business was the primary source of promotionality amongst our fascias in the half. However, we also made targeted price investments across our complementary businesses, particularly in Q2, in order to stay engaged with consumer dynamics.

Dominic Platt: On Finish Line, which remains a significant but short-term factor, this business was the primary source of promotionality amongst our fascias in the half. However, we also made targeted price investments across our complementary businesses, particularly in Q2, in order to stay engaged with consumer dynamics. The lower operating margin was also partly driven by investment to strengthen the brand positioning of the JD fascia in North America. This was partially offset by ongoing operational and back office efficiency measures across procurement, technology, and supply chain and logistics. Turning now to Europe. This region delivered organic sales of -0.5%, a resilient performance in a promotional market, supported by good growth across our sporting goods businesses.

Speaker #3: The lower operating margin was also partly driven by investment to strengthen the brand positioning of the JD fascia in North America, which was partially offset by ongoing operational and back-office efficiency measures across procurement, technology, supply chain, and logistics.

Speaker #3: Turning now to Europe. This region delivered organic sales of minus 0.5%—a resilient performance in a promotional market, supported by good growth across our sporting goods businesses.

Speaker #3: Europe's operating margin was flat year-on-year, with labor cost inflation and costs related to new space offset by cost efficiencies across retail, online, and supply chain operations, including the benefit of ramping automation within our Hairline distribution center in the Netherlands, and the unwind of the associated double-running technology and supply chain costs.

Dominic Platt: Europe's operating margin was flat year on year, with labor cost inflation and costs related to new space offset by cost efficiencies across retail, online, and supply chain operations, including the benefit of ramping automation within our Heerlen distribution center in the Netherlands and the unwind of the associated double running technology and supply chain costs. As a reminder, we expect over GBP 20 million of cost benefits across FY27 and FY28 as these double running costs fully unwind. In the UK, we saw an improved performance at JD as the half progressed, supported by apparel and accessories, which benefited from strong sales of football replica kit in Q2. Underlying performance remained challenged, particularly in footwear in a promotional market.

Speaker #3: As a reminder, we expect over 20 million pounds of cost benefits across FY27 and FY28 as these double-running costs fully unwind. In the UK, we saw an improved performance at JD as the half progressed, supported by apparel and accessories, which benefited from strong sales of football replica kit in Q2.

Speaker #3: Underlying performance remained challenged, particularly in footwear, in a promotional market. This was partially offset by continued momentum in JD Gyms, as well as improved performance in our outdoor business, which made meaningful operational progress in the half, including the ongoing simplification of its store estate and a well-received refresh of its product ranges.

Dominic Platt: This was partially offset by continued momentum in JD Gyms, as well as an improved performance in our outdoor business, which made meaningful operational progress in the half, including the ongoing simplification of its store estate and a well-received refresh of its product ranges. Overall, UK organic sales were down 1.6% for the half. The UK operating margin was 130 basis points lower year on year, largely due to targeted price investments and operating cost deleverage impacts. Asia Pacific delivered like-for-like sales growth of 3% and organic sales growth of 10.7%, with broad based strength across footwear, apparel and accessories, and its online channel. Operating margin was 90 basis points lower, largely driven by new store openings. Taking a look now at the profit bridge on slide 8.

Speaker #3: Overall, UK organic sales were down 1.6% for the half. The UK operating margin was 130 basis points lower year-on-year, largely due to targeted price investments and operating cost deleverage impacts.

Speaker #3: And finally, Asia Pacific delivered like-for-like sales growth of 3% and organic sales growth of 10.7%, with broad-based strength across footwear, apparel, and accessories, as well as its online channel.

Speaker #3: Operating margin was 90 basis points lower, largely driven by new store openings. Taking a look now at the profit bridge on slide 8. Please note that, for the purpose of underlying analysis, I have netted off marketing contributions in gross margin against the corresponding marketing costs within OPEX, which is reflective of how we manage and report the business internally.

Dominic Platt: Please note that for the purpose of underlying analysis, I have netted off marketing contributions in gross margin against the corresponding marketing costs within OpEx, which is reflective of how we manage and report the business internally. Starting with the headwinds from the left-hand side, the like-for-like gross margin rate reduction of 60 basis points, which excludes gross margin from new space, represented GBP 37 million. Like-for-like sales of -2.8% at a constant gross margin rate represented GBP 92 million to the decline. The contribution from net new space and annualizations was GBP 20 million. The next bar shows like-for-like OpEx inflation of GBP 45 million, primarily driven by inflation in our labor costs, including higher salaries as well as technology, digital, and marketing investments.

Speaker #3: Starting with the headwinds from the left-hand side, the like for like gross margin excludes gross margin from new space, represented 37 million pounds, and like for like sales of minus 2.8% at a constant gross margin rate, represented 92 million pounds to the decline.

Speaker #3: The contribution from net new space and annualizations was £20 million. The next bar shows like-for-like OPEX inflation of £45 million, primarily driven by inflation in our labor costs, including higher salaries, as well as technology, digital, and marketing investments.

Speaker #3: We maintained a strong focus on cost management in the half, delivering £57 million of variable and structural cost reductions through labor efficiencies, productivity initiatives, and operational synergies, thereby fully offsetting like-for-like OPEX inflation.

Dominic Platt: We maintained a strong focus on cost management in the half, delivering GBP 57 million of variable and structural cost reductions through labor efficiencies, productivity initiatives, and operational synergies, thereby fully offsetting like-for-like OpEx inflation. More on this in the next slide. The year-on-year mark to market movement of GBP 26 million, which is non-cash, reflects a credit of GBP 13 million in the half versus a charge of GBP 13 million in the prior period. We expect an offsetting mark to market charge of over GBP 10 million in the second half. We saw a GBP 6 million reduction in net finance expense, which excludes lease interest. The reduction was largely due to our cash generation and the benefit of the comprehensive debt refinancing we completed in July last year. Finally, other, which is largely the impact of translation FX year on year, was GBP 4 million.

Speaker #3: More on this in the next slide. The year-on-year mark-to-market movement of £26 million, which is non-cash, reflects a credit of £13 million in the half, versus a charge of £13 million in the prior period.

Speaker #3: We expect an offsetting mark-to-market charge of over £10 million in the second half. We saw a £6 million reduction in net finance expense, which excludes lease interest.

Dominic Platt: We expect an offsetting mark to market charge of over GBP 10 million in the second half. We saw a GBP 6 million reduction in net finance expense, which excludes lease interest. The reduction was largely due to our cash generation and the benefit of the comprehensive debt refinancing we completed in July last year. Finally, other, which is largely the impact of translation FX year on year, was GBP 4 million.

Speaker #3: The reduction was largely due to our cash generation and the benefit of a comprehensive debt refinancing we completed in July last year. And finally, 'Other', which is largely the impact of translation FX year-on-year, was £4 million.

Speaker #3: Against a challenging market and industry backdrop, maintaining our sharp focus on costs continues to be a priority. As I described in the previous slide, we fully offset like-for-like cost inflation in the half through our variable and structural cost reductions.

Dominic Platt: Against a challenging market and industry backdrop, maintaining our sharp focus on costs continues to be a priority. As I described in the previous slide, we fully offset like-for-like cost inflation in the half through our variable and structural cost reductions. We proactively flex store staff levels based on customer activity to help manage labor cost inflation. We continue to leverage our technology to drive operational efficiencies as we automated internal processes. We progressed the rollout of RFID in our JD UK stores.

Speaker #3: We proactively flex store staff levels based on customer activity to help manage labor cost inflation. We continue to leverage our technology to drive operational efficiencies as we automate internal processes, and we progressed the rollout of RFID in our JD UK stores.

Speaker #3: We are starting to realize benefits from our Hairline DC related to the technology and supply chain double-running costs. Beyond these structural actions, we took a broad-based approach to overhead management.

Dominic Platt: We are starting to realize benefits from our Heerlen DC related to the technology and supply chain double running costs. Beyond these structural actions, we took a broad-based approach to overhead management, driving savings across everything from procurement to travel and a range of other cost categories, all delivering meaningful savings in H1, with further benefits expected as these actions continue to flow through to H2. There is more we are going after in H2 as we leverage our new finance systems and scheduling tools and make further progress in modernizing and automating our distribution centers to name just a few examples. We expect these actions to deliver additional benefits in H2. Overall, we expect cost savings to be more H2 weighted. As set out in May, we are on track to significantly offset like-for-like OpEx inflation for the full year.

Speaker #3: Driving savings across everything from procurement to travel and a range of other cost categories, all delivering meaningful savings in H1, with further benefits expected as these actions continue to flow through to H2.

Speaker #3: There is more we are going after in H2, as we leverage our new finance systems and scheduling tools, and make further progress in modernizing and automating our distribution centers—to name just a few examples.

Dominic Platt: There is more we are going after in H2 as we leverage our new finance systems and scheduling tools and make further progress in modernizing and automating our distribution centers to name just a few examples. We expect these actions to deliver additional benefits in H2. Overall, we expect cost savings to be more H2 weighted. As set out in May, we are on track to significantly offset like-for-like OpEx inflation for the full year.

Speaker #3: We expect these actions to deliver additional benefits in H2. So overall, we expect cost savings to be more H2-weighted, and as set out in May, we're on track to significantly offset like-for-like OPEX inflation for the full year.

Speaker #3: On the next slide, we set out our summary cash flows for the half. Starting with our statutory PBT of 241 million pounds. Depreciation and amortization was 450 million pounds, up 19 million pounds year on year, reflecting investment in our stores, supply chain, and technology.

Dominic Platt: On the next slide, we set out our summary cash flows for the half, starting with our statutory PBT of GBP 241 million. Depreciation and amortization was GBP 450 million, up GBP 19 million year on year, reflecting investment in our stores, supply chain, and technology. Lease repayments were GBP 303 million, up GBP 49 million year on year. This increase was partly driven by seven lease payments made in the period, compared to six payments in H1 last year, due to the first of every month being the key lease payment date in many of the countries we operate in. Overall, operating cash flow was GBP 433 million for the half. The change in working capital resulted in a net outflow of GBP 144 million, which compares to an outflow of GBP 263 million a year ago.

Speaker #3: These repayments were £303 million, up £49 million year on year. This increase was partly driven by seven lease payments made in the period, compared to six payments in H1 last year, due to the first of every month being the key lease payment date in many of the countries we operate in.

Speaker #3: Overall, operating cash flow was £433 million for the half. The change in working capital resulted in a net outflow of £144 million, which compares to an outflow of £263 million a year ago. This included an increase in inventory of £308 million, reflecting the typical seasonal investment in back-to-school stock, and an inflow of £164 million related to net payables.

Dominic Platt: This included an increase in inventory of GBP 308 million, reflecting the typical seasonal investment in back-to-school stock and an inflow of GBP 164 million related to net payables. Gross capital expenditure in the half was GBP 175 million, down GBP 41 million year on year. Tax, interest, and other cash outflows were GBP 132 million. Overall, free cash flow was an outflow of -GBP 18 million, an improvement of GBP 50 million on H1 last year. Dividend payments and share buybacks in the period were a combined GBP 144 million. Overall, we saw a reduction in net cash of GBP 143 million since the year end, leading to a closing net cash position on the balance sheet of GBP 168 million before lease liabilities.

Speaker #3: Gross capital expenditure in the half was 175 million pounds, down 41 million pounds year on year. Tax interest and other cash outflows were 132 million pounds.

Speaker #3: Overall, free cash flow was an outflow of £18 million, an improvement of £50 million on H1 last year. Dividend payments and share buybacks in the period were a combined £144 million.

Speaker #3: Overall, we saw a reduction in net cash of £143 million since the year end, leading to a closing net cash position on the balance sheet of £168 million before lease liabilities.

Speaker #3: This marks an improvement of £293 million compared to H1 last year, after £260 million of cash returns to shareholders over the last 12 months.

Dominic Platt: This marks an improvement of GBP 293 million compared to H1 last year, after GBP 260 million of cash returns to shareholders over the last 12 months. We continue to manage our inventory and cash with focus and discipline and maintaining an efficient balance sheet. Net inventory was up 2% year on year at constant FX rates, reflecting stock build ahead of the back-to-school trading period, including the impact of a deferral into August of the timing of back-to-school season in large parts of the US. We continue to take a disciplined approach to CapEx with a strong focus on returns. Gross CapEx for the half was GBP 175 million, equivalent to 3% of sales, notably lower than the 3.6% of sales in H1 last year. This was driven by the completion of our supply chain investments in Europe and tighter store-related CapEx, down 19% year on year.

Speaker #3: We continue to manage our inventory and cash with focus and discipline, maintaining an efficient balance sheet. Net inventory was up 2% year-on-year at constant FX rates, reflecting stock build ahead of the back-to-school trading period, including the impact of a deferral into August of the timing of the back-to-school season in large parts of the US.

Speaker #3: We continue to take a disciplined approach to capex, with a strong focus on returns. Gross capex for the half was £175 million, equivalent to 3% of sales, notably lower than the 3.6% of sales in H1 last year.

Dominic Platt: We continue to take a disciplined approach to CapEx with a strong focus on returns. Gross CapEx for the half was GBP 175 million, equivalent to 3% of sales, notably lower than the 3.6% of sales in H1 last year. This was driven by the completion of our supply chain investments in Europe and tighter store-related CapEx, down 19% year on year.

Speaker #3: This was driven by the completion of our supply chain investments in Europe and tighter store-related capex, down 19% year-on-year. I'll come back to this point on the next slide.

Dominic Platt: I will come back to this point on the next slide. Reflecting our discipline, our CapEx guidance for the year is now GBP 350 to GBP 400 million. Finally, we continue to be focused on maintaining a strong and efficient balance sheet, including lease liabilities. Our net debt was just over GBP 2.9 billion, representing net leverage of 1.5 times. Including the Genesis buyout option in FY30 and FY31, our pro forma net leverage of two times remains in line with investment grade levels. Our overall liquidity position remains strong, providing us with significant headroom, including undrawn RCFs. Total liquidity at period end was GBP 1.7 billion. Given the challenging global market backdrop, our highly targeted approach on store investment and tight discipline on the application of our targeted rate of return serves us well.

Speaker #3: Reflecting our discipline, our capex guidance for the year is now £350 to £400 million. Finally, we continue to be focused on maintaining a strong and efficient balance sheet.

Speaker #3: Including lease liabilities, our net debt was just over £2.9 billion, representing net leverage of 1.5 times. And including the Genesis buyout option in FY30 and FY31, our pro forma net leverage of 2 times remains in line with investment-grade levels.

Speaker #3: Our overall liquidity position remains strong, providing us with significant headroom. Including undrawn RCFs, total liquidity at period end was £1.7 billion. Given the challenging global market backdrop, our highly targeted approach on store investment and tight discipline on the application of our targeted rate of return serve us well.

Speaker #3: While our stores and gyms capex was 19% lower year-on-year, our approach is delivering good results. Strategically, the investment in our store estate is increasingly as much about improving the productivity of our existing store estate as it is about new space.

Dominic Platt: While our stores and gyms CapEx was 19% lower year on year, our approach is delivering good results. Strategically, the investment in our store estate is increasingly as much about improving the productivity of our existing store estate as it is about new space. Through relocations, upsizes and conversions, including initiatives such as our fewer, bigger, better approach in the UK, in the period, we increased our focus on optimizing the productivity of our existing stores and catchment areas with 48 relocations and conversions completed in the half. These actions contributed 0.8 percentage points to sales, or 40% of the contribution from so-called new space. As you can see on the right-hand side, we have introduced comparable sales as a supplementary sales KPI. We believe this metric provides us and you with a more complete view of like-for-like performance by including all relocated and upsized stores.

Speaker #3: Through relocations, upsizes, and conversions—including initiatives such as our 'fewer, bigger, better' approach in the UK—in the period, we increased our focus on optimizing the productivity of our existing stores and catchment areas, with 48 relocations and conversions completed in the half.

Speaker #3: These actions contributed 0.8 percentage points to sales, or 40% of the contribution from so-called "new space." As you can see on the right-hand side, we have introduced comparable sales as a supplementary sales KPI. We believe this metric provides us, and you, with a more complete view of like-for-like performance by including all relocated and upsized stores, and also a more balanced view given our traditional like-for-like measure only captures the cannibalization effect on stores in the vicinity of a relocated store.

Dominic Platt: These actions contributed 0.8 percentage points to sales, or 40% of the contribution from so-called new space. As you can see on the right-hand side, we have introduced comparable sales as a supplementary sales KPI. We believe this metric provides us and you with a more complete view of like-for-like performance by including all relocated and upsized stores.

Dominic Platt: Also a more balanced view given our traditional like-for-like measure only captures the cannibalization effect on stores in the vicinity of a relocated store. On this basis, comparable sales were down 2% in the half versus like-for-like sales down 2.8%. Given the strategic importance of our ongoing actions to optimize the existing store estate, we consider comparable sales to be a more meaningful and consistent basis for assessing the underlying sales growth of our business. It is also the metric used by many of our US peers, so provides better comparability. Over time, we are expected to replace our current like-for-like sales measure. Outside of relocations, upsizes, conversions, we continue to take a disciplined approach to new store openings. In H1, we had 45 net store closures and 106 fewer stores year on year.

Speaker #3: On this basis, comparable sales were down 2% in the half, versus like-for-like sales down 2.8%. Given the strategic importance of our ongoing actions to optimize the existing store estate, we consider comparable sales to be a more meaningful and consistent basis for assessing the underlying sales growth of our business.

Speaker #3: It's also the metric used by many of our US peers, so it provides better comparability. Over time, we expect to replace our current like-for-like sales measure.

Speaker #3: Outside of relocations, upsizes, and conversions, we continue to take a disciplined approach to new store openings. In H1, we had 45 net store closures, and 106 fewer stores year-on-year.

Speaker #3: This compares to a sales contribution from net new space of 1.3 percentage points year-on-year, or 60% of the contribution from so-called new space overall. Taking optimization of existing stores and catchment areas together with net new space, the combined benefit to sales of our strategic actions on our store estate was 2.1 percentage points. This compares to a 0.7% net increase in our selling space year-on-year, clearly demonstrating improved productivity from our actions.

Dominic Platt: This compares to a sales contribution from net new space of 1.3 percentage points year on year, or 60% of the contribution from so-called new space. Overall, taking optimization of existing stores and catchment areas together with net new space, the combined benefit to sales of our strategic actions on our store estate was 2.1 percentage points. This compares to a 0.7% net increase in our selling space year on year, clearly demonstrating improved productivity from our actions. Moving now to our outlook and guidance for the year. First, with our market outlook. In May, we set out the conditions under which we could see a weaker, or indeed on the optimistic side, a stronger market growth outlook this year.

Speaker #3: Moving now to our outlook and guidance for the year. First, with our market outlook: In May, we set out the conditions under which we could see a weaker, or indeed, on the optimistic side, a stronger market growth outlook this year.

Speaker #3: We outlined an expectation for market growth to be muted in FY27, shaped by a weaker spending outlook for our core customer demographic and ongoing product cycle evolution at some of our brand partners, particularly in footwear.

Dominic Platt: We outlined an expectation for market growth to be muted in FY27, shaped by a weaker spending outlook for our core customer demographic and ongoing product cycle evolution at some of our brand partners, particularly in footwear. Since then, we have seen ongoing geopolitical and macroeconomic volatility driving a more challenging consumer backdrop. We saw this particularly as the Q2 progressed, with elevated consumer cost of living pressures alongside a slower environment for high heat footwear product against a highly promotional market backdrop, particularly in the US. As a result, and consistent with our Q2 trading statement last month, we have reflected these headwinds persisting into H2 within our view on annual market growth for each key region. We expect North America to be weaker, while our view on Europe and the UK is unchanged. Moving to our guidance for the year.

Speaker #3: Since then, we have seen ongoing geopolitical and macroeconomic volatility driving a more challenging consumer backdrop. We saw this particularly as the second quarter progressed, with elevated consumer cost-of-living pressures alongside a slower environment for high-heat footwear product against a highly promotional market backdrop, particularly in the US.

Speaker #3: As a result, and consistent with our Q2 trading statement last month, we have reflected these headwinds persisting into H2 within our view on annual market growth for each key region.

Dominic Platt: As a result, and consistent with our Q2 trading statement last month, we have reflected these headwinds persisting into H2 within our view on annual market growth for each key region. We expect North America to be weaker, while our view on Europe and the UK is unchanged. Moving to our guidance for the year.

Speaker #3: We expect North America to be weaker, while our view on Europe and the UK is unchanged. Moving to our guidance for the year: firstly, within our sales performance, we continue to expect net new space growth to contribute 2% to 3%.

Dominic Platt: Firstly, within our sales performance, we continue to expect net new space growth to contribute 2% to 3%. On profit before tax and adjusting items, we reiterate our guidance range of GBP 700 million to GBP 800 million. Given the macro and industry backdrop and our two biggest trading periods yet to come, we believe it is prudent to continue guiding to a wider range. Our free cash flow of GBP 460 million to GBP 520 million is unchanged, underpinned by our ongoing cost and capital discipline. In line with our capital allocation framework and confidence in our medium-term trajectory, we are committed to delivering attractive cash returns to shareholders. The board has declared an interim ordinary dividend of 0.4 pence per share, 21% higher year on year, and we are on track to complete the current GBP 200 million share buyback this financial year.

Speaker #3: On profit before tax and adjusting items, we reiterate our guidance range of £700 to £800 million. Given the macro and industry backdrop, and our two biggest trading periods yet to come, we believe it's prudent to continue guiding to a wider range.

Speaker #3: Our free cash flow of £460 million to £520 million is unchanged, underpinned by our ongoing cost and capital discipline. In line with our capital allocation framework and confidence in our medium-term trajectory, we are committed to delivering attractive cash returns to shareholders.

Dominic Platt: In line with our capital allocation framework and confidence in our medium-term trajectory, we are committed to delivering attractive cash returns to shareholders. The board has declared an interim ordinary dividend of 0.4 pence per share, 21% higher year on year, and we are on track to complete the current GBP 200 million share buyback this financial year.

Speaker #3: The Board has declared an interim ordinary dividend of 0.4 pence per share, which is 21% higher year-on-year. We are on track to complete the current 200 million share buyback this financial year. We reiterate our confidence in our cumulative free cash flow target of at least £1.4 billion over three years, and remain committed to our rolling annual share buyback program.

Dominic Platt: We reiterate our confidence in our cumulative free cash flow target of at least GBP 1.4 billion over three years, and remain committed to our rolling annual share buyback program. With my review concluded, let me hand back over to Régis for the business update.

Speaker #3: With my review concluded, let me hand back over to Reggie for the business update.

Speaker #1: Thank you, Dominique. Let's move now to the business update. Our five strategic priorities are the following: strengthening and diversifying our product range; driving store productivity; and optimization of our fashion portfolio.

Régis Schultz: Thank you, Dominic. Let us move now to the business update. Our five strategic priorities are the following: strengthening and diversify our product range, driving store productivity and optimization of our fascia portfolio, completing our global e-commerce replatforming, accelerating AI adoption, and taking data-driven customer personalization to the next level. Let me briefly cover AI, data, and loyalty before going to the first three priorities in more details. On AI, our approach is practical and pragmatic. We have two priorities. First, how AI can improve our customer experience. Second, how AI can improve our productivity. On the customer experience, we are exploring how customer can discover and buy JD product directly through AI platform. In US, we are one of the first retailers to achieve this milestone. Customer can complete their entire shopping journey within the AI platform, from discovery to payment, thanks to our partnership with Google, Stripe, and commercetools.

Speaker #1: Completing our global e-commerce replatforming, accelerating AI adoption, and taking data-driven customer personalization to the next level. Let me briefly cover AI, data, and loyalty before going into the first three priorities in more detail.

Speaker #1: On AI, I approach this in a practical and pragmatic way. We have two priorities: first, how AI can improve our customer experience; second, how AI can improve our productivity.

Régis Schultz: We have two priorities. First, how AI can improve our customer experience. Second, how AI can improve our productivity. On the customer experience, we are exploring how customer can discover and buy JD product directly through AI platform. In US, we are one of the first retailers to achieve this milestone. Customer can complete their entire shopping journey within the AI platform, from discovery to payment, thanks to our partnership with Google, Stripe, and commercetools.

Speaker #1: On the customer experience, we are exploring how our customers can discover and buy JD products directly through the AI platform. In the US, we are one of the first retailers to achieve this milestone.

Speaker #1: Customers can complete their entire shopping journey within the AI platform, from discovery to payment, thanks to our partnership with Google, Stripe, and Commerce Tool.

Speaker #1: We are actively ramping this up to reach more customers. This is an early example of how shopping journeys are changing. Twenty-five percent of online shoppers in the US use AI as a primary source of research and recommendation.

Régis Schultz: We are actively ramping this up to reach more customers. This is an early example of how shopping journeys are changing. 25% of online shoppers in the US use AI as a primary source of research and recommendation, and also an example of how our technology partnership can help us to stay closer to our customer. On productivity, we are working on AI deployment across JD full value chain, from inventory replenishment, markdown optimization at the individual store and SKU level, and to customer service automation. For example, at abit, AI-powered voice agents already handle 40% of customer service calls entirely, reducing the cost per service request by around 30%. On inventory replenishment, our merchandising team has developed an AI tool to optimize availability at SKU store level with a +1.5% sales impact versus the control group.

Speaker #1: And also, an example of how our technology partnership can help us stay closer to our customers: On productivity, we are working on AI deployment across the JD full value chain, from inventory replenishment, markdown optimization at the individual store and queue level, and to customer service automation.

Speaker #1: For example, at EBIT, AI-powered voice agents already handle 40% of customer service calls entirely, reducing the cost per service request by around 30%.

Speaker #1: On inventory replenishment, our merchandising team has developed an AI tool to optimize availability at SKU-store level, with a plus 1.5% sales impact versus a control group.

Speaker #1: On markdown optimization, we are using AI to analyze stock, sales, and demand data across our store to identify end-of-life and broken size.

Régis Schultz: On markdown optimization, we are using AI to analyze stock, sales, and demand data across our store to identify end-of-life and broken size inventory to redistribute in order to minimize markdown and maximize sales. The tool automates a highly complex decision-making process that was previously impractical to perform manually. In the test, we asked AI to process 3.2 million data points per second to deliver an improved sales through of 70% versus 57%, and a net profit of GBP 1 million on this specific test. Early days, but a lot of opportunity to do better what we do for a living, to have the right stock at the right place at the right time and at the right price. On data, the first step has been to develop our loyalty program.

Speaker #4: Inventory can be redistributed in order to minimize markdown and maximize sales. The tool automates a highly complex decision-making process that was previously impractical to perform manually.

Speaker #4: In the test, we asked AI to process 3.2 million data points per second to deliver an improved sales throughput of 70% versus 57%, and a net profit of £1 million on this specific test.

Speaker #4: It's still early days, but there's a lot of opportunity to do better in what we do for a living—to have the right stock in the right place at the right time, and at the right price.

Speaker #4: On data, the first step has been to develop our loyalty program. JD Status has now passed 10 million active customers globally. In the first half, Status members accounted for 40% of JD UK in-store revenue and 45% of all JD US transactions.

Régis Schultz: JD STATUS has now passed 10 million active customers globally. In H1, STATUS members accounted for 40% of JD UK in-store revenue and 45% of all JD US transactions. STATUS members have average order value approximately 20% higher than non-loyalty customers. It gives us a tool to build a strong and unique relationship with our customers, with better insight into how they shop. Those insights will help us to drive our personalization engine and to develop more services, more experience, and product for them. For example, in H1, each targeted communication generated over GBP 1 million in incremental sales against control groups. Early days for us, but we have plenty of opportunity to leverage our data to deliver more sales and profit.

Speaker #4: Status members have an average order value approximately 20% higher than non-loyalty customers. This gives us a tool to build a strong and unique relationship with our customers, with better insight into how they shop.

Speaker #4: Those insights will help us to drive our personalization engine and to develop more services, experiences, and products for them. For example, in the first half, each targeted communication generated over £1 million in incremental sales against control groups.

Speaker #4: It's still early days for us, but we have plenty of opportunity to leverage our data to deliver more sales and profit. Going back to product, we have shown this slide before.

Régis Schultz: Going back to product, we have shown this slide before, but it is a good illustration of the strength of our model and how product range is evolving, and how we capture trends quickly with our agile and multi-brand proposition. In footwear, performance running and newer not sneaker styles are gaining momentum. While relatively small today in our mix, Mary Jane ballet flat, ballerina, loafer, and brands like Birkenstock, UGG, and Havaianas are supporting continued growth in the other category. The question we ask ourselves, is the future of sneaker a revision of a formal shoes? Whatever is the future, we will win with a winner. In running, we have now two subcategories, retro running and new running with On, HOKA, Salomon, Nike Vomero Plus, all growing very fast. Running clubs and gyms are becoming the new nightclubs. Health, fitness, and wellbeing are increasingly a priority for our core customers.

Speaker #4: But it's a good illustration of the strength of our model and how our product range is evolving, and how we capture trends quickly with our agile approach.

Speaker #5: and multi-brand proposition.

Speaker #4: In footwear, performance running and new wear—not sneaker styles—are gaining momentum. While relatively small today in our mix, Mary Jane ballet flats, ballerina, loafer, and brands like Birkenstock, UGG, and Havaianas are supporting continued growth in the Other category.

Speaker #4: The question we ask ourselves is: Is the future of sneakers a revision of formal shoes? Whatever the future holds, we will win with a winner.

Régis Schultz: The question we ask ourselves, is the future of sneaker a revision of a formal shoes? Whatever is the future, we will win with a winner. In running, we have now two subcategories, retro running and new running with On, HOKA, Salomon, Nike Vomero Plus, all growing very fast. Running clubs and gyms are becoming the new nightclubs. Health, fitness, and wellbeing are increasingly a priority for our core customers.

Speaker #4: In running, we now have two subcategories: retro running and new running, with On, Hoka, Salomon, and Vomero+, all growing very fast. Running clubs and gyms are becoming the new nightclubs.

Speaker #4: Health, fitness, and well-being are increasingly a priority for our core customers. This shift in customer trends within our running category is helping to offset the year-on-year decline in the mix of retro basketball and retro football categories.

Régis Schultz: This shift of customer trend within our running category is helping to offset the year-on-year mix decline in retro basketball and retro football category. In apparel, performance and street fashion continue to be the standout categories. The data shown on the slide is for the UK and Europe, but the direction is consistent across all our regions. In the US, our growth in apparel is fueled by street fashion and our own brands and licensed brands. They represent around 15% of apparel sales and allow us to respond quickly to new trends and offer competing price points. They also provide structural margin benefits. With products unavailable elsewhere, we have greater control over pricing and less exposed to the promotional dynamics that affect the broader market. We combine the expertise of our industry-leading buyers and merchandisers with insight from thousands of young store colleagues around the world.

Speaker #4: In apparel, performance and street fashion continue to be the standout categories. The data shown on the slide is for the UK and Europe, but the direction is consistent across all our regions.

Speaker #4: In the US, our growth in apparel is fueled by street fashion, as well as our own brands and licensed brands. They represent around 15% of apparel sales and allow us to respond quickly to new trends.

Régis Schultz: In the US, our growth in apparel is fueled by street fashion and our own brands and licensed brands. They represent around 15% of apparel sales and allow us to respond quickly to new trends and offer competing price points. They also provide structural margin benefits. With products unavailable elsewhere, we have greater control over pricing and less exposed to the promotional dynamics that affect the broader market. We combine the expertise of our industry-leading buyers and merchandisers with insight from thousands of young store colleagues around the world.

Speaker #4: and offer accompanying price bonds. They also provide structural margin benefits. With products unavailable elsewhere, we have greater control over pricing and are less exposed to the promotional dynamics that affect the broader market.

Speaker #4: We combine the expertise of our industry-leading buyers and merchandisers with insight from thousands of young store colleagues around the world. This keeps us close to our customers.

Régis Schultz: This keeps us close to how our customers shop and how trends are changing. This is why we are broadening the assortment across athletic leisure, streetwear, and performance. More brands, more style, and more trends, all carefully curated for the JD customer. Even more important, we do not just sell brands, we shape what the brands sell. Today, around 50% of our apparel assortment and 30% of our footwear assortment is exclusive to JD. This is a real competitive advantage. We combine our deep customer knowledge, our clear positioning, and our scale to work with our brands partner to develop products relevant to our customer and unique to us. For the brand, we bring something equally important, scale and access to a large, clearly defined customer base. This makes us the number one strategic partner.

Speaker #4: We know how our customers shop and how trends are changing. This is why we are broadening the assortment across athletic leisure, streetwear, and performance. More brands, more style, and more trends—all carefully curated for the JD customer.

Speaker #4: Even more important, we don't just sell brands; we shape what the brands sell. Today, around 50% of our apparel assortment and 30% of our footwear assortment is exclusive to JD.

Speaker #4: This is a real competitive advantage. We combine our deep customer knowledge, our clear position in the market, and our scale to work with our brand partners to develop products relevant to our customers and unique to us.

Speaker #4: For the brand, we bring something equally important: scale and access to a large, clearly defined customer base. This makes us the number one strategic partner.

Speaker #4: And for JD, create differentiation, reduce direct price comparison, and give us greater influence over the product we sell. As the market matures, I believe this becomes even more important.

Régis Schultz: For JD, it creates differentiation, reduces direct price comparison, and gives us greater influence over the product we sell. As the market matures, I believe this becomes even more important. This is why we see exclusive product as a core competitive capability. It makes us unique for our customer and for our brand partner. The second strategic priority is driving better store productivity. There are three parts, optimizing the estate, converting stores where other fascia can perform better within the demographic, and continuing with fewer, bigger, and better stores. As Dominic highlighted, we continue to review every store and invest where we see the best customer and financial returns. At EBIT, we now started the program previously announced to close around 170 lower performing stores over the three years. In Eastern Europe, we are moving to a franchise model with our partner, Sport Vision.

Speaker #4: This is why we see exclusive product as a core competitive capability. It makes us unique for our customer and for our brand partner. The second strategic priority is driving better store productivity.

Speaker #4: There are three parts: optimizing the estate; converting stores where other fascias can perform better within the demographic; and continuing with fewer, bigger, and better stores.

Régis Schultz: There are three parts, optimizing the estate, converting stores where other fascia can perform better within the demographic, and continuing with fewer, bigger, and better stores. As Dominic highlighted, we continue to review every store and invest where we see the best customer and financial returns. At EBIT, we now started the program previously announced to close around 170 lower performing stores over the three years. In Eastern Europe, we are moving to a franchise model with our partner, Sport Vision.

Speaker #4: As Dominique highlighted, we continue to review every store and invest where we see the best customer and financial returns. At EBIT, we have now started the program previously announced to close around 170 lower-performing stores over the next three years.

Speaker #4: In Eastern Europe, we are moving to a franchise model with our partner, Sportvision. Subject to regulatory approvals, stores in existing markets—except Poland—will transfer to Sportvision.

Régis Schultz: Subject to regulatory approvals, stores in existing market, except Poland, will transfer to Sport Vision. JD will also enter six new market through this capital light model. In Germany, our restructuring is all now complete. We have consolidated to a core estate of 62 stores, providing us with a stronger and linear base from which to improve performance. In North America, store conversions are on track. We expect to convert or close all standalone Finish Line stores by the end of financial year 2028 and to complete around 60 City Gear conversions this year. The aim is straightforward, put the strongest fascia in each location and improve the return from the estate. In the UK, we opened JD flagship stores in Cardiff and Sheffield and closed 17 stores. This is fewer, bigger, and better in practice.

Speaker #4: And JD will also enter six new markets through this capital-light model. In Germany, our restructuring is now complete. We have consolidated to a core estate of 62 stores, providing us with a stronger and leaner base from which to improve performance.

Speaker #4: In North America, store conversions are on track. We expect to convert or close all standalone Finish Line stores by the end of financial year 2021.

Speaker #4: And to complete around 60 City Gear conversions this year. The aim is straightforward: put the strongest fascia in each location and improve the return from the estate.

Speaker #4: In the UK, we opened JD flagship stores in Cardiff and Sheffield and closed 17 stores. This is 'fewer, bigger, and better' in practice. Overall, a 0.7% increase in net new space contributed 2.1 percentage points to group sales in the first half.

Régis Schultz: Overall, a 0.7% increase in net new space contributed 2.1 percentage points to group sales in H1, which gives us confidence in the strategy. Beyond our own store estate, we are building out our international franchise platform with a focus on driving the JD brand into new and high-growth markets. Further to our work in Eastern Europe, we have signed a long-term agreement with Grupo Axo, Mexico's leading omni-channel retail distributor, to operate more than 140 JD stores starting in 2027. Mexico is a market of over 130 million people with a rapidly growing active wear sector. This capital-light model accelerates our global reach while remaining consistent with our disciplined approach to investment. Today, we have 83 franchise JD and Courir stores in Africa, the Middle East, and Asia, with Mexico and Eastern Europe to follow soon.

Speaker #4: Which gives us confidence in the strategy. Beyond our own store estate, we are building out our international franchise platform, with a focus on driving the JD brand into new and high-growth markets.

Speaker #5: market.

Speaker #4: Further to our work in Eastern Europe, we have signed a long-term agreement with Grupo Axxo, Mexico's leading omnichannel retail distributor, to operate more than 140 JD stores starting in 2027.

Speaker #4: Mexico is a market of over 130 million people, with a rapidly growing activewear sector. This capital-light model accelerates our global reach while remaining consistent with our disciplined approach to investment.

Speaker #4: Today, we have 83 franchised JD and Korea stores in Africa, the Middle East, and Asia. With Mexico and Eastern Europe to follow soon, we will move to well over 250 stores, supporting our margin and return on capital employed.

Régis Schultz: We will move to well over 250 stores soon, supporting our margin and return on capital employed. Turning to e-commerce, we have now launched a new platform in the UK and Ireland following successful implementation last year in North America, Southeast Asia, Italy, and our UK outdoor business. The remaining European markets are on track for H2. We are already seeing benefits. For example, outdoor online sales progress well in the app following its move to Shopify in January, enabling more orders fulfilled from stores. Across the group, online organic sales grew by more than 5%, and online now represents 20% of overall sales. Replatforming is a foundation, not the endpoint. With the benefit of better technology platforms, we are actively exploring and testing e-commerce marketplace propositions across the group to broaden product choice for our customers and using AI to improve product discovery and conversion.

Speaker #4: Turning to e-commerce, we have now launched a new platform in the UK and Ireland, following successful implementation last year in North America, Southeast Asia, Italy, and our UK store.

Speaker #5: outdoor business.

Speaker #4: The remaining European markets are on track for the second half. We are already seeing benefits. For example, outdoor online sales progressed well in the year following its move to Shopify in January, enabling more orders to be fulfilled from stores.

Speaker #4: Across the group, online organic sales grew by more than 5%, and online now represents 20% of overall sales. Replatforming is a foundation, not the endpoint.

Régis Schultz: Across the group, online organic sales grew by more than 5%, and online now represents 20% of overall sales. Replatforming is a foundation, not the endpoint. With the benefit of better technology platforms, we are actively exploring and testing e-commerce marketplace propositions across the group to broaden product choice for our customers and using AI to improve product discovery and conversion.

Speaker #4: With the benefit of better technology platforms, we are actively exploring and testing e-commerce marketplace propositions across the group to broaden product choice for our customers, and using AI to improve product discovery and conversion.

Speaker #4: We are also exploring social commerce formats. For example, DTLA TikTok Shop is already a top 10 account in the US in its category, driving meaningful incremental traffic and transactions—a proof point we are looking to build on across our other fascias.

Régis Schultz: We are also exploring social commerce formats. For example, DTLR TikTok Shop is already a top 10 account in the US in its category, driving meaningful incremental traffic and transactions, a proof point we are looking to build on across our other fascia. We will also build on the agentic purchasing capability now live in the US on the JD fascia. The most important point is that our teams can now test and launch improvements materially faster than before, from search through to checkout and post-purchase service, while enabling new services and propositions that will propel JD's omni-channel offer forward. Our priority for H2 and beyond is clear: drive growth and improve profitability. That requires different action across each of our regions. In North America, we will keep building awareness of the JD brand, supported by store openings and conversion.

Speaker #4: We will also build on the agentic processing capability now live in the US on the JD Fashion. The most important point is that our teams can now test and launch improvements materially faster.

Speaker #4: than before, from search through to checkout and post-purchase service, while enabling new services and propositions that will propel JD Sports Fashion PLC/ADR Omnichannel offer forward.

Speaker #4: Our priority for the second half and beyond is clear: drive growth and improve profitability. That requires different actions across each of our regions. In North America, we will keep building awareness of the JD brand, supported by store openings and conversion.

Régis Schultz: Our priority for H2 and beyond is clear: drive growth and improve profitability. That requires different action across each of our regions. In North America, we will keep building awareness of the JD brand, supported by store openings and conversion.

Speaker #4: Apparel, and in particular womenswear, is one of our biggest growth levers in North America. A stronger apparel proposition drives traffic.

Régis Schultz: Apparel, and in particular womenswear, is one of our biggest growth levers in North America. A stronger apparel proposition drives traffic, basket size, improved margin mix, and makes our store a more distinctive destination. Apparel penetration in North America is still meaningfully below other regions, and closing that gap is a clear priority. More broadly, we are taking action to optimize the store estate in Europe, and we are reducing supply chain and logistic costs. Automation is ramping up our Heerlen distribution center across both store and customer fulfillment. We have now wound down our smaller Belgium distribution facility. In the UK, fewer, bigger, and better continue to be our priority alongside cost productivity. We are starting to see encouraging results from our work to improve the outdoor business, while our gym business continues to perform strongly.

Speaker #6: Basket size, improved margin mix, and making our stores a more distinctive destination. Our apparel penetration in North America is still meaningfully below other regions, and closing that gap is a clear priority.

Speaker #6: More broadly, we are taking action to optimize the store estate in Europe, and we are reducing supply chain and logistics costs. Automation is ramping up in our LM distribution center across both store and customer fulfillment.

Régis Schultz: More broadly, we are taking action to optimize the store estate in Europe, and we are reducing supply chain and logistic costs. Automation is ramping up our Heerlen distribution center across both store and customer fulfillment. We have now wound down our smaller Belgium distribution facility. In the UK, fewer, bigger, and better continue to be our priority alongside cost productivity. We are starting to see encouraging results from our work to improve the outdoor business, while our gym business continues to perform strongly.

Speaker #6: We have now wound down our smaller base.

Speaker #5: distribution facility.

Speaker #6: In the UK, "fewer, bigger, and better" continues to be our priority, alongside cost productivity. We are starting to see encouraging results from our work to improve the outdoor business, while our gym business continues to perform strongly.

Speaker #6: Across all regions, we will maintain the same cost and capital discipline that supported us in the first half. And for North America and Europe in particular, the ongoing development of our omnichannel and loyalty offers are key drivers of our plans to grow our market share.

Régis Schultz: Across all regions, we will maintain the same cost and capital discipline that supported us in H1. For North America and Europe in particular, the ongoing development of our omni-channel and loyalty offers are key drivers of our plans to grow our market share, sales, and profitability. Overall, in a more normalized market environment, the biggest margin opportunity is in Europe, where our action on stores, supply chain, and digital should support a much healthier operating profit over the medium term. We also see a clear opportunity in North America, where we have grown to nearly GBP 5 billion of annual sales in less than 10 years. In the UK, our focus is to maintain our FY26 margin through productivity and cost discipline. To conclude, this was a resilient sales performance in H1 despite a difficult market.

Speaker #6: Sales and profitability overall, and in a more normalized market environment, the biggest margin opportunity is in Europe, where our actions on stores, supply chain, and digital should support a much healthier operating profit over the medium term.

Speaker #6: We also see a clear opportunity in North America, where we have grown to nearly 5 billion pounds of annual sales in less than ten years.

Speaker #6: In the UK, our focus is to maintain our full-year 2026 mark through productivity and cost discipline. To conclude, this was a resilient sales performance in the first half, despite a difficult market.

Speaker #6: We stay close to our customer and maintain tight control of cost and capital. We made tangible progress on our strategic priorities: broadening the product range, improving the store estate, completing more of the e-commerce replatforming, and scaling AI and royalty.

Régis Schultz: We stay close to our customers and maintain tight control of cost and capital. We made tangible progress on our strategic priorities, broadening the product range, improving the store estate, completing more of the e-commerce replatforming, and scaling AI and loyalty. Our agile multi-brand model and growing own brand offer is helping us respond as footwear and apparel trends change, while online continues to grow, supported by our new technology platform. Tight cost discipline means that we held our like-for-like OpEx flat year on year, and our balance sheet is stronger, with net cash improving by nearly GBP 300 million year on year after GBP 260 million of cash return to shareholders. Our full-year guidance is unchanged from the Q2 trading statement. Against a challenging backdrop, we are controlling the controllable. We are broadening and strengthening our product proposition with more brands, more trends, and more exclusive products.

Speaker #6: Our agile multi-brand model and growing own-brand offer are helping us respond as footwear and apparel trends change, while online continues to grow, supported by our new technology platform.

Speaker #6: Tight cost discipline means that we held our like-for-like OpEx flat year-on-year, and our balance sheet is stronger, with net cash improving by nearly £300 million year-on-year after £260 million of cash return to shareholders.

Régis Schultz: Tight cost discipline means that we held our like-for-like OpEx flat year on year, and our balance sheet is stronger, with net cash improving by nearly GBP 300 million year on year after GBP 260 million of cash return to shareholders. Our full-year guidance is unchanged from the Q2 trading statement. Against a challenging backdrop, we are controlling the controllable. We are broadening and strengthening our product proposition with more brands, more trends, and more exclusive products.

Speaker #6: Our full-year guidance is unchanged from the Q2 trading statement. Against a challenging backdrop, we are controlling the controllable. We are broadening and strengthening our product proposition with more brands, more trends, and more exclusive product.

Speaker #6: We are improving the productivity of our stores and our capital. And we are building a much stronger digital and data capability to understand our customer better and serve them better.

Régis Schultz: We are improving the productivity of our stores and our capital. And we are building a much stronger digital and data capability to understand our customer better and serve them better. At the same time, we remain disciplined on cost and capital while continuing to generating strong cash and invest behind the area where we see the greatest returns. That is what give me confidence and put us in a strong place to deliver sustainable growth and stronger profitability over time in a more normal market environment. Before we move to Q&A, I want to thank all our colleagues around the world for their continued hard work and focus. Thank you. We will now take your question.

Speaker #6: At the same time, we remain disciplined on cost and capital, while continuing to generate strong cash and invest behind the areas where we see the greatest returns.

Speaker #6: That is what gives me confidence and puts us in a strong place to deliver sustainable growth and stronger profitability over time, in a more normal market environment.

Speaker #6: Before we move to Q&A, I want to thank all our colleagues around the world for their continued hard work and focus. Thank you. We will now take your questions.

Speaker #4: We will now start the Q&A. If you're a sell-side analyst dialed into the call and wish to ask a question, please use the raised hand function at the bottom of your Zoom screen.

Operator: We will now start the Q&A. If you are a sell-side analyst dialed into the call and wish to ask a question, please use the raise hand function at the bottom of your Zoom screen. If you have dialed in, please select star nine to raise your hand and star six to unmute. We will take our first question from Jonathan Pritchard with Peel Hunt. Please go ahead. Jonathan, your line is unmuted. Please go ahead. Okay, we are unable to hear you, Jonathan, so we will come back to you shortly.

Speaker #4: If you've dialed in, please select *9 to raise your hand and *6 to unmute. We'll take our first question from Jonathan Pritchard with Peel Hunt.

Speaker #4: Please go ahead. Jonathan, your line is unmuted. Please go ahead. Okay, we're unable to hear you, Jonathan, so we'll come back to you shortly.

Jonathan Pritchard: You may have to

Speaker #4: Oh, we can hear you now. Please go ahead. We'll move on, Jonathan, and come back to you shortly. Our next question will come from Nick Barker with BNPP.

Operator: Oh, we can hear you now. Please go ahead. We will move on, Jonathan, and come back to you shortly. Our next question will come from Nick Bubb with BNP Paribas. Please unmute your line and go ahead.

Speaker #4: Please unmute your line and go ahead.

Speaker #7: Good morning, everyone, and thank you for taking my questions. Just two from me. Firstly, on the replatforming in the UK, I'm just wondering if you can give us a bit more detail, a bit more color, as to what's happened to conversion there and where it's had the greatest impact.

Nick Bubb: Good morning, everyone, and thank you for taking my questions. Just two from me. Firstly, on the re-platforming in the UK, I am just wondering if you can give us a bit more color as to what has happened to conversion there and where it has had the greatest impact. That is the first one. Then secondly, I noted that you are maintaining the free cash flow guidance, but lowering CapEx slightly. I was wondering if you could take us through the moving parts of that. Thank you very much.

Nick Barker: Good morning, everyone, and thank you for taking my questions. Just two from me. Firstly, on the re-platforming in the UK, I am just wondering if you can give us a bit more color as to what has happened to conversion there and where it has had the greatest impact. That is the first one. Then secondly, I noted that you are maintaining the free cash flow guidance, but lowering CapEx slightly. I was wondering if you could take us through the moving parts of that. Thank you very much.

Speaker #7: That's the first one. And then secondly, I noted that you're maintaining the sort of free cash flow guidance but lowering CapEx slightly. I was wondering if you could take us through the moving parts of that.

Speaker #7: Thank you very much.

Speaker #4: Okay, thank you for the question. I will take the replatforming and provide a meaningful answer. The free cash flow replatforming in the UK—in fact, it's not only one replatforming; we have replatformed our outdoor business, which is for brands, as you know, moving out of our existing platform to Shopify.

Régis Schultz: Thank you for the question. I will take the re-platforming and Dominic will answer the free cash flow. Re-platform in UK, in fact, it is not only one re-platforming, it is that we have re-platformed our outdoor business, which is for brands, as you know, moving out of our existing platform to Shopify, and we did that in January. From that time, our sales in total outdoor are up 25% year on year. So definitively it is proving to increase the conversion and increasing our sales that are in line with a very good H1 for our outdoor business. So it has proved to be beneficial not only to our online business, but to our brand. For UK, for JD UK, it is too early to say. It has happened in August.

Speaker #4: And we did that in January. From that time, our sales in Total Outdoor are up 30%, and up 25% year on year. So, definitely, this is proving to increase the conversion and increase our sales.

Speaker #4: And that has been in line with a great, a very good first half for our outdoor business. So, it has proved to be beneficial not only to our online business but also to our brands.

Speaker #4: For the UK—for JD UK—it's too early to say. It happened in August, so I think the first things we are seeing are some good improvements in terms of conversion, especially on the checkout page, but it's early days.

Régis Schultz: I think that the first things we are seeing is some good improvements in terms of the conversion, especially on the checkout page, but early days, so we will update you at the end of the year. I will let Dominic answer your question on cash.

Speaker #4: So, we'll update you at the end of the year. I will let Dominique answer your question.

Speaker #8: Hi, Nick. Yes, so our guidance on free cash flow is unchanged from where we put it in May. I think it's fair to say there's an element of conservatism in our position.

Dominic Platt: Hi, Nick. Yes. Our guidance on free cash flow is unchanged from where we put it in May. I think it is fair to say there is an element of conservatism in our position at the May number. Notwithstanding a slightly lower profit expectation and guidance, the update in August, we are still confident of delivering the free cash flow. You pointed to CapEx, yes, slightly down GBP 350 million to GBP 400 million against our guidance of GBP 400 million at the year-end. I think that just reflects our highly disciplined approach to where we spend our money on CapEx. We continue to invest in the business. As I and Reggie spoke about in our presentations, our store CapEx increasingly, around 40%, is on reinvesting in new estate, but we continue to invest in new space.

Speaker #8: At the May number. So, notwithstanding a slightly lower profit expectation and guidance that we updated in August, we're still confident of delivering the free cash flow.

Speaker #8: You pointed to CapEx, yes, slightly down — £350 to £400 million against our guidance of £400 million at the year end. I think that just reflects our highly disciplined approach to where we spend our money on CapEx.

Speaker #8: We continue to invest in the business, as I and Raiti spoke about in our presentations. Our store CapEx— increasingly, around 40% is on reinvesting in new estate.

Speaker #8: We continue to invest in new space, but in a slightly softer market. Our criteria have been at the margins. There are slightly fewer new stores that we feel comfortable opening at this point in time.

Dominic Platt: But in a slightly softer market, our criteria being look at the margins, there are slightly fewer new stores that we feel comfortable opening at this point in time. All that flows through to a slightly lower CapEx spend for the year. Overall, we see an improved position on working capital outflow this year compared to last year. All of those factors flow through to underpinning our free cash flow guidance.

Speaker #8: So, that all flows through to a slightly lower CapEx spend. And then, overall, we see an improved position on working capital outflow this year compared to last year.

Speaker #8: So all of those factors flow through, underpinning our free cash flow guidance. Thank you very much. Thank you. Our next question will come from Richard Taylor with Barclays.

Nick Bubb: Thank you very much.

Nick Barker: Thank you very much.

Operator: Thank you. Our next question will come from Richard Taylor with Barclays. Please go ahead.

Speaker #8: Please go ahead. Yeah, good morning. Hopefully, you can hear me. Can you tell us what you're thinking strategically?

Richard Taylor: Yeah, good morning. Hopefully you can hear me. Can you tell us what you're thinking strategically?

Operator: We can hear you.

Speaker #7: Great, thanks very much. Sorry, just a question, really, on range. Can you tell us what you're thinking strategically about products? What's your biggest brand partner that goes through a weaker innovation period?

Richard Taylor: Great. Thanks very much. Sorry. Just a question really on range. Can you tell us what you're thinking strategically about products once your biggest brand partner goes through a weaker innovation period? Are you willing to make more significant action on backing brands that currently have momentum versus waiting for a turnaround? Aligned to this, can you talk us through about your exclusives? I think you mentioned 50% on the call. Is this higher or lower with some of the higher growth brands? Then a separate question on inventory. I see it's up around 2% constant currency versus sales down a percent or so. You've had back to school, so interested to know what inventory would've been excluding that sort of timing difference. Just more about how you're thinking about inventory going forward given expectations of lower like-for-like sales growth in the second half from consensus.

Speaker #7: Are you willing to make more significant action on backing brands that currently have momentum versus sort of waiting for a turnaround? And aligned to this, can you tell us what you're thinking about Can you talk us through about your exclusives?

Speaker #7: I think you mentioned 50% on the call. Is this higher or lower with some of the higher-growth brands? And then a separate question on inventory.

Richard Taylor: Then a separate question on inventory. I see it's up around 2% constant currency versus sales down a percent or so. You've had back to school, so interested to know what inventory would've been excluding that sort of timing difference. Just more about how you're thinking about inventory going forward given expectations of lower like-for-like sales growth in the second half from consensus. So I guess inventory is still up, but the outlook looked great. Does this still reflect oversupply of products in the industry? Thank you.

Speaker #7: I see it's up around 2% on a constant currency basis. This is sales down a percent or so. I wonder if you've had any back-to-school. I'm interested to know what inventory would have been, excluding that sort of timing difference. But just more about how you're thinking about inventory going forward, given expectations of lower like-for-like sales growth in the second half from consensus.

Speaker #7: So I guess inventory is still up, but the outlook looks great. Does this reflect the oversupply of products in the industry? Thank you.

Richard Taylor: So I guess inventory is still up, but the outlook looked great. Does this still reflect oversupply of products in the industry? Thank you.

Speaker #4: Okay, I will take the first two, and Dominique, you will go through the inventory questions. Range, we are not waiting for anything.

Régis Schultz: Okay, I will take the first two, and Dominic, you will go through the inventory questions.

Dominic Platt: Sure.

Régis Schultz: Okay. Range, we are not waiting for anything. We have been the first one to implement On in the UK. We have the exclusivity for almost three tiers last year. It has been us building the On brand in the UK and in Europe. I think we, as I always say, we are selling to our customer what they want to buy, and if they want to buy Nike, we propose Nike. If they want to buy On, if they want to buy Adidas. Our merchandising is fully flexible. As you know, we do not sell our space, contrary to some other retailer. Our space is fully flexible as we do not sell the space. We have a full flexibility, and I think our assortment is moving linked to the trends and nothing else than the trends and the appetite for our customer for different products.

Speaker #8: We are— we have been the first one to implement it in the UK. We had the exclusivity for almost three years, till last year. So, it has been about building their own brands in the UK and in Europe.

Speaker #8: So I think we, as I always say, are proposing—we are selling to our customer what they want to buy. And if they want to buy Nike, we propose Nike.

Speaker #8: If they want to buy On, if they want to buy Adidas, our merchandising is fully flexible.

Régis Schultz: If they want to buy On, if they want to buy Adidas. Our merchandising is fully flexible. As you know, we do not sell our space, contrary to some other retailer. Our space is fully flexible as we do not sell the space. We have a full flexibility, and I think our assortment is moving linked to the trends and nothing else than the trends and the appetite for our customer for different products.

Speaker #4: As you know, we don't sell our space, contrary to some other retailers. Our space is fully flexible, as we don't sell the sales—

Speaker #8: So we have full flexibility, and I think our assortment is moving in line with the trends and nothing other than the trends and the appetite of our customers for different products.

Speaker #8: So, we believe that we are well placed, and our market share, in fact, is higher.

Régis Schultz: We believe that we are as well-placed, and our market share, in fact, is higher with some of the new brands than it is with our number one brand. It is replaced that, and our return on space is the same, is higher with Nike than it is with the other brands showing that we are investing for the other brands. All of that shows that we are not waiting anything, and we are just acting and moving our range with the trends and with our customer taste. In term of exclusivity, it is stable. It is around 30% in footwear, 50% in apparel. In fact, it is more with those other brands than it is with Nike. There is no difference in the way we operate with different brands.

Speaker #9: With some of the new brands, it is different than it is with our number one brand. So it's replaced that. And our return on space is the same, or higher with Nike than it is with the other brands, showing that we are investing for the other brands.

Speaker #9: So all of that shows that we are not waiting for anything, and we're just acting and moving our range with the trends and with our customers' tastes.

Speaker #9: In terms of exclusivity, it's pretty stable. It's around 30% in footwear and 50% in apparel. In fact, there is more with other brands than with Nike.

Speaker #9: This is where we— so there is no difference in the way we operate with different brands. So we operate on the same, with the same playbook.

Régis Schultz: We operate with the same playbook, which is around how we make sure that we have a distinctive, unique offer for our customer, and that is the way we work with all the brands. There is no difference between one brand to another one. There is brands who are more agile than other brands, and that give us more ability to have exclusivity, and some brands are more respectful or are having a more tight distribution policy than other brands. That differ, but our strategy is the same. It is how we define products that are the best for our customer and how we do that in partnership with the brands. We are the number one partner for most of the brands. Our size of business means that we are the number one, number two partner for all the brands.

Speaker #9: This is about how we make sure that we have a distinctive, unique offer for our customer, and that's the way we work with all the brands.

Speaker #9: There's no difference between one brand and another. There are brands where we are more agile than others, and that gives us more ability to have exclusivity.

Speaker #9: And some brands are more respectful or have tighter distribution policies than other brands. So that differs, but our strategy is the same. It's how we define products that are best for our customer and how we do that in partnership with the brand.

Speaker #9: And we are the number one partner for most of our brands. So, our size of business means that we are the number one or number two partner for all the brands.

Speaker #9: So there is no difference in any of our positioning with the brand. And we continue to develop as our sales have been more—you know, there's a big difference between footwear and apparel, why it is higher specifically.

Régis Schultz: There is no difference in any of our positioning with the brand. We continue to develop as our sales has been more. There is a big difference between footwear and apparel, why it is higher exclusive, because it is a more agile production type, and that give us the ability to react more quickly. I think that you have seen our performance in apparel +4% in a muted market. That is a great performance, which is a tribute to the quality of what we are doing when we have the full flexibility that we do not have in footwear because of the difficulty to change more than the way you produce footwear as quickly as we would like to. I think be reassured, we are working the same way with all brands. Inventory?

Speaker #9: It's a more agile production type, and that gives us the ability to react more quickly. And I think that you have seen our performance in apparel, plus 4% in a muted market.

Speaker #9: That's a great performance, which is a tribute to the quality of what we're doing when we have the full flexibility that we don't have in footwear, because of the difficulty to change mold and the way you produce footwear as quickly as we would like to. But I think, be reassured, we are working the same way with all brands.

Speaker #9: Indentary? Yeah, hi Richard. Yes, so our...

Dominic Platt: Yeah. Hi, Richard. Yes, so our stock was up 2% on a year-on-year basis. It is difficult to be precise about exactly what the back-to-school impact of that is, but it is true to say that for North America as a whole, back to school was delayed. Labor Day was a week later, and all of that put things backwards. So we feel comfortable that we are at the end of the H1 in terms of where our stock position is. I think as you know well, we have got a good track record of managing our stock tightly. We buy tightly, and we manage it and turn it over well. We have got the biggest period to come. We have obviously been through back to school. We have Black Friday and peak to come.

Speaker #10: Stock was up 2% like-for-like on a year-on-year basis. It's difficult to be precise about exactly what the back-to-school impact of that is, but it's true to say that for North America as a whole, back-to-school was delayed, Labor Day was a week later, and all of that put things backwards.

Speaker #10: So, we feel comfortable that we're at the end of the first half in terms of where our stock position is. But I think, as you know well, we've got a good track record of managing our stock tightly.

Speaker #10: We buy tightly, and we manage it conservatively. Well, we've got the biggest period still to come. Obviously, we've been through back to school. We have Black Friday and peak still to come.

Speaker #10: That is the key period where managing our stock through the year will come to show how strong we are in that area. The market position—yes, there is a lot of stock out there.

Dominic Platt: That is the key period where managing our stock through the year will come to show how strong we are in that area. The market position, yes, there is a lot of stock out there. It is often the case when you have a softer period. I do not think we see that materially changing through the H1. We have seen a promotional environment that has resulted in price investment we have taken. We expect that to continue through the H2. I do not think we see any material change from where we have been in the H1 through to the H2 in terms of stock positioning in the industry as a whole and impact on our margin rates.

Speaker #10: It's often the case when you have a softer period. I don't think we see that materially changing through the first half. We've seen a global environment back to normal.

Speaker #10: That has resulted in the price investment we've taken. We expect that to continue through the second half. So I don't think we see any material change from where we did in the first half.

Speaker #10: through the second half, in terms of stock positioning in this industry as a whole, and impact on our margins. Thank you very much.

Régis Schultz: Thank you very much.

Richard Taylor: Thank you very much.

Speaker #8: Our next question will come from Anne Critchlow with Berenberg. Please go ahead.

Operator: Our next question will come from Anne Critchlow with Berenberg. Please go ahead.

Anne Critchlow: Hi. Good morning. I've got one question, please, on the online re-platforming. I think US online sales grew quite strongly as a result of the new app, and I just wondered what the impact was in your view, and whether you expect a benefit on UK online sales in the second half. Thank you.

Speaker #11: Good morning. I've got one question, please, on the online replatforming. I think US online sales grew quite strongly as a result of that—as a result of the new app.

Speaker #11: And I just wondered what the impact was, in your view, and whether you expect to benefit on UK online sales in the second half.

Speaker #11: Thank you.

Speaker #9: Yeah, so I think you're right. We grew in the US quite strongly online. I think that what we have seen is a faster checkout, especially the one-page checkout, which has increased our conversion in this area.

Régis Schultz: Yeah. I think you're right. We grew in US quite strongly online. I think what we have seen is that the faster checkout, especially the one-page checkout, has proved to increase our conversion on this part. I think we are expecting the same in Europe when we will go through the full implementation of the new platform. That should benefit UK, but I think the most important is appetite for the consumer. We are not expecting that to be revolutionary. I think it's more an evolution, and it's more it give us a lot of option long term. We were not able to click and collect same day in our store because of our old platform. We were not able to do marketplace.

Speaker #9: So I think we are expecting the same in Europe when we go through the full implementation of the new platform. That should benefit the UK, but, you know, I think the most important thing is appetite from the consumer.

Speaker #9: So, we are not expecting that to be revolutionary. I think it's more an evolution, and it gives us a lot of options long-term.

Speaker #9: We are not able to do Click and Collect same day in our store because of our old platform. We are not able to do marketplace.

Speaker #9: There are plenty of limitations that we've identified, and that should help us to grow our digital business in the coming 18 to 24 months.

Régis Schultz: There's plenty of limitations that we were limited to, and that should help us to grow our digital business in the coming 18 to 24 months. It will not be a big and it's moving double right away. But I think it's more a midterm continuing growth of our online penetration.

Speaker #9: It will not be a, you know, "bing," and it's moving double right away, but I think it's more a mid-term continuing growth of our online penetration.

Speaker #9: Thank you.

Jonathan Pritchard: Thank you.

Anne Critchlow: Thank you.

Speaker #8: Thank you. Our next question will come from Richard Chamberlain with RBC. Please go ahead.

Operator: Thank you. Our next question will come from Richard Chamberlain with RBC. Please go ahead.

Speaker #6: Thank you very much. Morning, guys. A couple of questions, please. I guess one thing that surprised me, reading the statement today, was that you said the statutory gross margin decline was partially offset by higher marketing contributions.

Richard Chamberlain: Thank you very much. Morning, guys. A couple of questions, please. I guess one thing that surprised me reading the statement today was that you said that the statutory gross margin decline was partially offset by higher marketing contributions. I would have thought in a more subdued demand environment, marketing contributions might be down. I guess it would be helpful if you could explain what is going on there, what is driving that increase. That is the first one, and then the second one was there a positive gross margin mix effect in H1 from the outperformance of apparel versus footwear? Thank you.

Speaker #6: I would have thought, in a more subdued demand environment, that marketing contributions might be down. So I guess it would be helpful if you could explain what's going on there—what's driving that increase?

Speaker #6: That's the first one. And then, the second one,

Speaker #7: Was there a positive margin mix effect, a gross margin mix effect, in the first half from the outperformance of apparel versus footwear? Thank you.

Speaker #9: Okay, so the mix, as you know, margin is similar. So there is no mix impact really, because our margin in both categories is very similar.

Régis Schultz: Okay. Mix, as you know, margin is similar, so there is no mix really impact because our margin in both categories are very similar.

Régis Schultz: Okay. Mix, as you know, margin is similar, so there is no mix really impact because our margin in both categories are very similar. I know you would. There is no element of that. On the first one, I think, when market is tough, you need to create demand, so you need to invest in marketing. I think that we have been able to capture more of that from the brand because they want to create demand, they want to create appetite, and they know that JD customer is the most important to create the trend and to create that.

Speaker #9: So, I don't think you will— There is no element of that. And the second— On the first one, I think, you know, when the market is tough, you need to create demand.

Richard Chamberlain: Okay.

Régis Schultz: I know you would. There is no element of that. On the first one, I think, when market is tough, you need to create demand, so you need to invest in marketing. I think that we have been able to capture more of that from the brand because they want to create demand, they want to create appetite, and they know that JD customer is the most important to create the trend and to create that. I think they have diversed some money that they have for other brand or for other way of promoting their product to us. A reflection of that is a reflection of our size and our scale. That is the two elements that is driving our increased marketing contribution from the brand. I think that in a tough market, you select the best retailer, and we are the best retailer.

Speaker #9: So, you need to invest in marketing. And I think that we have been able to capture more of that from the brand, because they want to create demand.

Speaker #9: They want to create appetite, and they know that JD customers are the most important to create the trends and to create that. So I think they have diverted some money that they had for other brands.

Régis Schultz: I think they have diversed some money that they have for other brand or for other way of promoting their product to us. A reflection of that is a reflection of our size and our scale. That is the two elements that is driving our increased marketing contribution from the brand. I think that in a tough market, you select the best retailer, and we are the best retailer.

Speaker #9: Or other way of promoting their product to us, and that is a reflection of that. It's a reflection of our scale, so those are the two elements that are driving our increased marketing contribution from the brand.

Speaker #9: I think that in a tough market, you select the best retailer, and we are the best retailer.

Speaker #6: Sure. Okay, thank you.

Richard Chamberlain: Cool. Okay. Thank you.

Speaker #8: Our next question will come from Jonathan Pritchard with Peel Hunt. Please unmute your line and go ahead. Definitely not working.

Operator: Our next question will come from Jonathan Pritchard with Peel Hunt. Please unmute your line and go ahead.

Régis Schultz: It is not working.

Jonathan Pritchard: Hello? Hello? Can you hear me?

Speaker #9: Hello, can you hear me? We can hear you now.

Operator: We can hear you now.

Speaker #10: Sorry, guys. Firstly, regarding brand recognition in the US, could you just give a bit more color on that, please? Then, following up on Richard's question about the gross margin.

Jonathan Pritchard: Sorry, guys. Firstly, brand recognition in the US, could you just give a bit more color on that, perhaps, please? Following up on Richard's question on the gross margin, where H2 will be in the second half, could you perhaps give us a bit of guidance as to whether those marketing contributions will continue or what the underlying investment will be? Lastly, should we look upon FY27 as a trough year? What are your early thoughts on FY28?

Speaker #10: Where do you think we'll be in the second half? Could you just perhaps give us a bit of guidance as to whether those marketing contributions will continue, or what the underlying investment will be?

Speaker #10: And then lastly, should we look upon FY27 as a trough year? What are your early thoughts on FY28?

Speaker #9: Okay, remind me of the first question. I didn't get the recognition—what? Brand recognition? Okay. So brand recognition in the US, I think that we continue...

Régis Schultz: Okay. Remind me the first question. I did not get it.

Jonathan Pritchard: Brand recognition.

Régis Schultz: What?

Jonathan Pritchard: Brand recognition.

Régis Schultz: Okay. Brand recognition, and Dominic will do the-

Dominic Platt: I will be able to.

Régis Schultz: So brand recognition in US, I think the main driver of JD brand recognition, because that is the one you were talking about, is linked to our store estate and to the increase of our store estate. We have done a fantastic job in New York, and we see that it is a very influential and very important market, and we see that our growth and we see the brand recognition going up. The rest of US, we are doing city by city, key market by key market, because it would be wrong to try to do all US in one go. It is linked to the conversion and to opening program, but we are making good progress, and we are looking forward to show you how this is on the field when we go to Florida in October.

Speaker #9: I think the main driver of our JD brand recognition, because that's the one you were talking about, is linked to our store estate and to the increase of our store estate.

Speaker #9: We have done a fantastic job in New York, and we see that it's a very influential and very important market. We see that our goals are being met, and we see brand recognition going up.

Speaker #9: The rest of the US, we are doing, you know, city by city, key market by key market, because it would be wrong to try to do all of the US in one go.

Speaker #9: So it's linked to the conversion and to opening program, but we're making good progress, and we're looking forward to showing you how this is on the field when we go to Florida in October.

Speaker #10: Thank you, Regis. And Jonathan, on your other two questions, on gross margin, our statutory gross margin was down 28 points. That does reflect two dynamics.

Dominic Platt: Thank you, Regis. Jonathan, on your other two questions. On gross margin, our statutory gross margin was down 20 basis points. That does reflect two dynamics. As we have been saying, we have made targeted price investments to remain competitive. That is around 50 basis points impact in the half. That is for new estate and like-for-like, down about 60 basis points. That has been offset by the marketing contributions that we have had. Regis spoke about those earlier on. In our own internal accounts, we look at those as being netted off against marketing spend that we make in OpEx. IFRS, we have to put those in marketing. So in the first half, down 20 basis points, 50 basis points investment in price, offset by about 30 basis points on marketing contributions.

Speaker #10: As we've been saying, we have made targeted price investments to remain competitive. That's around a 50 basis point impact in the half. And that's for new space and like-for-like. Like-for-like is down about 60 basis points.

Speaker #10: And that's been offset by the marketing contributions that we've had. Bree spoke about those earlier on. In our own internal accounts, we look at those as being netted off against marketing spend that we make in OpEx, but for IFRS, we have to put those in marketing.

Speaker #10: So, in the first half, down 20 basis points. Fifty basis points investment in price, offset by about 30 basis points on marketing spend. Contributions.

Speaker #10: I think as you look forward into the second half, we're not seeing anything that will change the price investment that we'll need to make as we go through H2.

Dominic Platt: I think as you look forward into the second half, we are not seeing anything that would change the price investments that we will need to make as we go through H2. So I think around that at least 50 basis points, I would say, remains a valid assumption to roll forward. There are likely to be some marketing contributions. It is very difficult at this stage to say exactly what those will be as we build those campaigns with our brands through the second half. So I think the underlying point is to roll forward the underlying price investment through the rest of the year. In terms of looking at FY28, well, we still have the biggest part of our FY27 to go, so we have not yet prepared our budgets for FY28.

Speaker #10: So, I think around that—at least 50 basis points—I would say remains a valid assumption to roll forward. There are likely to be some marketing contributions.

Speaker #10: It's very difficult at this stage to say exactly what those will be, as we build those campaigns with our brands through the second half.

Speaker #10: So, I think the underlying point is to roll forward the underlying price investment through the rest of the year. In terms of looking at FY28, well, we still have the biggest part of our FY27 to go, so we haven't yet prepared our budgets for FY28.

Speaker #10: It's important that we see how the second half trends persist, and how we see particularly peak season through December performing. Having said that, I think if you look at the top line overall, I don't think we see anything today that will result in a material change in the macro environment, in the consumer environment, or indeed in the footwear side going into FY28.

Dominic Platt: It is important that we see how the second half trends persist and how we see a particular peak season through December performing. Having said that, I think if you look at the top line overall, I don't think we see anything today that will result in a material change in the macro environment, in the consumer environment, or indeed in the footwear side as we go into FY28. No particular silver bullets there change things materially. We do continue to invest in space, both improving our existing store space and new space, and I think maintaining a 2% to 3% uplift from that sensible approach. Inflation continues. We are all seeing inflation starting to increase a bit now. So I think that is one that we are monitoring closely.

Speaker #10: No particular silver bullets there to change things materially. We do continue to invest in space, both improving our existing store estate and new space, and I think maintaining a 2% to 3% uplift from that.

Speaker #10: It's a sensible approach. Inflation continues. I mean, we're all seeing inflation starting to increase a bit now, so I think that's one that we're monitoring closely.

Speaker #10: Clearly, we're taking a lot of actions around how we offset that, but as the headwind potentially gets stronger, that will clearly be a harder point we need to work on.

Dominic Platt: Clearly, we are taking a lot of actions around how we offset that, but as the headwind potentially hits, that will clearly be a harder point we need to work on. I think, for us at this point in time, too early to be definitive about FY28. But continuing to focus on controlling the controllables as we are doing just to ensure that we enter next year in the best position possible. Okay. Thank you.

Speaker #10: So I think, you know, for us at this point in time, it's too early to be definitive about FY28, but continuing to focus on controlling controllables, as we're doing, just ensures that we enter...

Speaker #9: Next year, we'll be in the best position possible. Okay, thank you.

Jonathan Pritchard: Okay. Thank you.

Speaker #8: Our next question will come from Anubhav Malhotra with Panmure Liberum. Please go ahead. Anubhav, please unmute your line and go ahead with your question.

Operator: Our next question will come from Anubhav Malhotra with Panmure Gordon. Please go ahead. Anubhav, please unmute your line and go ahead with your question.

Speaker #10: Got it. Um, can you hear me now? Excellent.

Anubhav Malhotra: Got it. Can you hear me now? Excellent.

Speaker #12: Yes, all right. Just two questions from me, please, if you don't mind. Firstly, just digging deeper into the gross margin and gross—

Dominic Platt: Yes.

Anubhav Malhotra: Just two questions from me, please, if you do not mind. Firstly, just digging deeper into the gross margin. Gross margin, if I look by divisions, it is sporting goods and outdoors. The margin gross, growth margin over there rose 200 basis points. Just maybe a bit of color on what is driving the increase there, and is that something that we should expect to be repeated in H2? Because that was clearly offset from JD Sports, the JD segment margin going down 60 basis points and complementary athleisure going down 30 basis points in H1. Secondly, on the franchisee model decision in Eastern Europe, 70 stores are getting transferred there. Maybe a bit more color on the driver of this decision and if there are any other geographies you may be looking to do the same in.

Speaker #13: Margin— if I look by divisions, I mean Sporting Goods and Outdoors, the margin growth, gross margin over there, rose 200 basis points. Just maybe a bit of color on what's driving the increase there?

Speaker #13: And is that something that we should expect to be repeated in the second half? Because that was clearly offset from JD Sports—the JD segment margin going down 60 basis points and complementary athleisure going down 30 basis points in the first half.

Speaker #13: And then secondly, on the franchisee model decision in Eastern Europe: 70 stores are getting transferred there. Maybe a bit more color on the driver of this decision, and if there are any other geographies you may be looking to do the same in?

Anubhav Malhotra: Secondly, on the franchisee model decision in Eastern Europe, 70 stores are getting transferred there. Maybe a bit more color on the driver of this decision and if there are any other geographies you may be looking to do the same in. And also, what should we expect in terms of any cash consideration from that? Were these loss-making stores and the sale would be accretive to earnings or not really? Thank you.

Speaker #13: And also, what should we expect in terms of any cash consideration from that? And will these loss-making stores and the sale be kind of accretive to earnings, or not really?

Anubhav Malhotra: And also, what should we expect in terms of any cash consideration from that? Were these loss-making stores and the sale would be accretive to earnings or not really? Thank you.

Speaker #13: Thank you.

Speaker #9: Okay, I will take the franchise one and Denis will take the gross margin. You start? Okay, yeah, I'll start on the gross margin. So, Anouar, good to hear from you.

Dominic Platt: Okay, I will take the franchise one, and then you take the gross margin. You start? Okay. I will start on the gross margin. So Anubhav, good to hear from you. I think what you picked up in the middle of that is our sporting goods businesses in Europe, outdoors in the UK, Sprinter Sports here in Iberia, and Cosmos in Greece have had a good H1. I think what that reflects is a proposition that is probably more value proposition overall, a more commodity proposition that is responding and resonating very well with customers at the moment. I think that shows the diversity of our business model, alongside the Sports Fashion business. That allows us to sell in at good full price to our customer set.

Régis Schultz: Okay, I will take the franchise one, and then you take the gross margin. You start?

Dominic Platt: Okay. I will start on the gross margin. So Anubhav, good to hear from you. I think what you picked up in the middle of that is our sporting goods businesses in Europe, outdoors in the UK, Sprinter Sports here in Iberia, and Cosmos in Greece have had a good H1. I think what that reflects is a proposition that is probably more value proposition overall, a more commodity proposition that is responding and resonating very well with customers at the moment. I think that shows the diversity of our business model, alongside the Sports Fashion business. That allows us to sell in at good full price to our customer set.

Speaker #10: I think what you picked up in the middle of that is our sporting goods businesses in Europe—Outdoors in the UK, Sprinter Sports Zone in Iberia, and Cosmos in Greece—have had a good quarter.

Speaker #10: First half, and I think what that reflects is a proposition that is probably more of a value proposition overall—a more commodity proposition that's responding and resonating very well.

Speaker #10: ...with customers at the moment. And I think that shows the diversity of our business model alongside the sports fashion business. That allows us to sell in at good, full price to our customer set.

Speaker #10: And also, our businesses in Greece and Outdoors have done a really good job over the last 12 months of improving their stock position, which has allowed them to put more newness in front of customers.

Dominic Platt: Also, our businesses in Greece and outdoors have done a really good job over the last 12 months of improving their stock position, which has allowed them to put more newness in front of customers. We see it particularly in our outdoors business. Good old fashioned retail, if you put newness in front of customers, improve your stock, you see your gross margin improve. So I think on an annual basis, as we go into H2, that will persist. Overall for the group, I think the answer I gave to Jonathan earlier on is that when you look at the balance between Sports Fashion and the product, particularly footwear product cycle that we are seeing, versus the relatively smaller sporting goods, the overall price investment underlying at around 50 basis points through the year is probably the best place to think about at the group level.

Speaker #10: We see it particularly in our outdoors business. And, you know, good old-fashioned retail—if you put newness in front of customers, improve your stock, you see your gross margin improve.

Speaker #10: So, I think on an annual basis, as we go into the second half, that will persist. Overall, for the group, I think the answer I gave to Jonathan earlier is that when you look at the balance between sports fashion and the sort of product—particularly footwear product cycle that we are seeing—versus the relatively smaller sporting goods, the overall price investment, underlying at around 50 basis points through the year, is probably the best place to think about it.

Dominic Platt: Overall for the group, I think the answer I gave to Jonathan earlier on is that when you look at the balance between Sports Fashion and the product, particularly footwear product cycle that we are seeing, versus the relatively smaller sporting goods, the overall price investment underlying at around 50 basis points through the year is probably the best place to think about at the group level.

Speaker #10: about at the group level.

Speaker #9: And concerning franchise, I think that's a very good question. When I look at the group, we have been clear about where we want to operate by ourselves and where we don't want to operate by ourselves.

Dominic Platt: Concerning franchise, I think that it is a very good question. So when I look at the group, and we are being clear where we want to operate by ourselves and where we do not want to operate by ourselves, I think it is linked to a multiple, mainly three factor. The first one is around size of the market. The second one is around complexity to operate in the market. The third one is around ability to operate in the market on the property and some of the. If you take Eastern Europe, the first element is small markets. It is a complex addition of small markets with a different language. Some are in EU, in Europe, some are not in Europe, so different currency.

Régis Schultz: Concerning franchise, I think that it is a very good question. So when I look at the group, and we are being clear where we want to operate by ourselves and where we do not want to operate by ourselves, I think it is linked to a multiple, mainly three factor. The first one is around size of the market. The second one is around complexity to operate in the market. The third one is around ability to operate in the market on the property and some of the. If you take Eastern Europe, the first element is small markets. It is a complex addition of small markets with a different language. Some are in EU, in Europe, some are not in Europe, so different currency.

Speaker #9: And I think it's linked to multiple—mainly three—factors. The first one is around size of the market. The second one is around complexity to operate in the market.

Speaker #9: And the third one is around, you know, the ability to operate in a market on the property and some of the core elements. And if you take Eastern Europe, you know, the first element is small markets.

Speaker #9: It's a complex addition of small markets with a different language. Some are in Europe, some are not in Europe, so different currency. And I think that, you know, it's a reflection—which is a reflection that I'm having at the group level—of how we do the best of the two worlds: localized and leveraged.

Dominic Platt: I think that it's a reflection which is a reflection that are happening at the group level, which is how we do the best of the two worlds, localize and leverage our scale. When you look at Eastern Europe, we definitely didn't localize. To be fair, it's difficult for me to play in the team when the team is looking after big markets. Looking after a small market, it's not a priority. In some of the markets, we are doing less than or much less than what we're doing in one store in Trafford. That is a reflection around it. At the same moment, those markets require love and tender as much as any market and require adaptation to the local customer.

Régis Schultz: I think that it's a reflection which is a reflection that are happening at the group level, which is how we do the best of the two worlds, localize and leverage our scale. When you look at Eastern Europe, we definitely didn't localize. To be fair, it's difficult for me to play in the team when the team is looking after big markets. Looking after a small market, it's not a priority. In some of the markets, we are doing less than or much less than what we're doing in one store in Trafford. That is a reflection around it. At the same moment, those markets require love and tender as much as any market and require adaptation to the local customer.

Speaker #9: And when you look at Eastern Europe, we definitely did it localized. And, to be fair, it's difficult for me to blame the team when the team is looking after big markets and looking after a small market. It's not a priority.

Speaker #9: And, you know, in some of the markets, we are doing less than—or much less than—what we're doing in one store in Trafford.

Speaker #9: So, that is a reflection around it. And at the same moment, those markets require love and thunder as much as—

Speaker #4: any market and requires adaptation to the local customer. So that's why we believe the best of both worlds is

Dominic Platt: That's why we believe the best of the two worlds is having a local partner through franchise and at the same moment leveraging our scale. I think the great thing is that Sport Vision already operates those markets for a long time. It's a big business in those markets.

Régis Schultz: That's why we believe the best of the two worlds is having a local partner through franchise and at the same moment leveraging our scale. I think the great thing is that Sport Vision already operates those markets for a long time. It's a big business in those markets.

Speaker #9: Having a local partner through franchise and, at the same moment, leveraging our scale. And I think the great thing is that Sportvision already operates in those markets for a long time.

Speaker #9: It's a big business in those markets, with a big and very successful sporting goods business. And they had an equivalent of JD, or a copy of JD.

Régis Schultz: With a big and a very successful sporting goods business. They had an equivalent of JD or a copy of JD, which Go Sport. They recognize that our expertise is worth doing a partnership, and that's what we're doing. So it's the best of the two world, operate with the best format and the best concept that exists in our industry, which is JD. At the same moment, being able to localize to a partner that live and breathe those small country. That's the strategy behind that. In term of financial, the way it works, that we would have an inflow of cash because we will start to have stock for those countries, and that will come gradually because we have placed order. This stock will go to our Sport Vision, and we will sell this stock to Sport Vision in the coming months.

Speaker #9: Which is called Buzz, and they recognized that our expertise is worth doing a partnership. And that's what we're doing. So it's the best of the two worlds.

Speaker #9: Operate with the best format and the best concept that exists in our industry—which is JD—and, at the same moment, be able to localize through partners that live and breathe those small countries.

Speaker #9: And that's the strategy behind that. In terms of financials, the way it works is that we will have an inflow of cash because we will start to have stock for those countries.

Régis Schultz: In term of financial, the way it works, that we would have an inflow of cash because we will start to have stock for those countries, and that will come gradually because we have placed order. This stock will go to our Sport Vision, and we will sell this stock to Sport Vision in the coming months.

Speaker #9: And that will come gradually because we have placed orders. So this stock will go to Sportvision, and we will sell the stock to Sportvision in the coming months.

Speaker #9: So that will have an impact in the coming 6 to 9 months. In terms of working capital, there will be an impact on our on the assets that we have because we will so we we are we are selling our assets.

Régis Schultz: That will have an impact in the coming six, nine months in term of working cap. There will be an impact on the assets that we have because we are selling our assets in those countries to Sport Vision. That will have a positive impact in term of our cash flow and reduce our cash. At the group level, it's not significant. In term of profit, we were, I would say, breakeven on those countries. So we will make a profit where we were breakeven. So it will not be very material for the group, but I think it shows a strategy around how we get the best of the two world, more localization, fewer assets, focusing on key markets, and at the same moment, having a global reach to our customer through the best concept that exists in the industry through franchise.

Speaker #9: In those countries, to support vision, and so that will have a positive impact in terms of our cash flow and reduce our cash.

Speaker #9: But at the group level, it's not significant. And in terms of profit, I would say we were break-even in those countries. So we will make a profit when—we were break-even, so it will not be very material for the group.

Régis Schultz: So it will not be very material for the group, but I think it shows a strategy around how we get the best of the two world, more localization, fewer assets, focusing on key markets, and at the same moment, having a global reach to our customer through the best concept that exists in the industry through franchise.

Speaker #9: But I think it shows the strategy around how we get the best of both worlds: more localization, fewer assets, focusing on key markets, and, at the same time, having a global reach.

Speaker #4: To our customer, through the best concept that exists in the industry, through franchise. That's very clear. Thank you.

Anubhav Malhotra: That is very clear. Thank you.

Speaker #8: Our next question will come from Grace Smallie with Morgan Stanley. Please go ahead.

Operator: Our next question will come from Grace Smalley with Morgan Stanley. Please go ahead.

Speaker #11: Hi, good morning. Thank you for taking my questions. My first one would be a near-term question on current trading. I appreciate that you don't comment specifically when we have your trading update in November, but could you just remind us how we should think about quantifying the back-to-school shift in the US between the second and third quarter?

Grace Smalley: Hi. Good morning. Thank you for taking my questions. My first one, just near term on current trading. I appreciate you do not comment specifically, and we have your trading update in November, but could you just remind us about how we should think about quantifying the back-to-school shift in the US between Q2 and Q3? Is it fair to think that overall underlying trading trends, excluding that back-to-school shift, remain broadly unchanged? Are there any other puts and takes we should be considering when thinking about modeling our Q3 like for likes? Then a follow-up question, please, on the industry inventory and promotional dynamics. Dominic, I think you mentioned still excess inventories out there and that continues in terms of the promotional environment into H2 similarly to H1.

Speaker #11: And is it fair to think that overall underlying trading trends, excluding that back-to-school shift, remain broadly unchanged? Or are there any other puts and takes we should be considering when thinking about modeling our Q3 like-for-likes?

Grace Smalley: Are there any other puts and takes we should be considering when thinking about modeling our Q3 like for likes? Then a follow-up question, please, on the industry inventory and promotional dynamics. Dominic, I think you mentioned still excess inventories out there and that continues in terms of the promotional environment into H2 similarly to H1.

Speaker #11: And then a follow-up question, please, on the industry inventory and promotional dynamics. So, Dominic, I think you mentioned still excess inventory out there, and that continues in terms of the promotional environment into the second half, similarly to H1.

Speaker #11: Well, I know—I appreciate you don't have a magic ball—but would you? What do you think is a reasonable timeline for the industry to work through the excess inventories that are out there in the trade?

Grace Smalley: I appreciate you do not have a magic ball, but what do you think is a reasonable timeline for the industry to work through the excess inventories that are out there in the trades? Is there a risk that this could be a continued overhang into next year? Any kind of color you could provide in terms of where you see pockets of excess inventory in terms of any specific product categories or regions would be helpful. Then, sorry, I have a third, which is also a follow-up just on your comments on FY28. Again, I know you are not guiding specifically, but it seemed from your earlier comments that there is no kind of obvious immediate inflection on the macro side or in terms of the footwear lifestyle product cycle.

Speaker #11: And is there a risk that this could be a continued overhang in into next year, and any kind of color you could provide in terms of where you see pockets of excess inventory in terms of any specific product categories or regions would be helpful.

Speaker #11: And then, sorry, I have a third, which is also a follow-up just on your comments on fiscal '28. Again, no, you're not guiding specifically, but it seemed from your earlier comments that there's no kind of obvious immediate inflection on the macro side or in terms of the footwear lifestyle product cycle.

Grace Smalley: Then, sorry, I have a third, which is also a follow-up just on your comments on FY28. Again, I know you are not guiding specifically, but it seemed from your earlier comments that there is no kind of obvious immediate inflection on the macro side or in terms of the footwear lifestyle product cycle.

Speaker #11: Just wondering, on products specifically, as you're looking at building your order books into next year, what's the feedback from buyers that have seen the brand's product for next year in the showrooms?

Grace Smalley: Just wondering on product specifically, as you are looking at building your order books into next year and the feedback from buyers that have seen the brand's product for next year in the showrooms, just what are the puts and takes you are seeing in terms of product category drivers that we should think of going into next year? Thank you very much.

Speaker #11: What are the puts and takes you're seeing in terms of product category drivers that we should consider going into next year? Thank you very much.

Speaker #9: Okay, I will do the last two and Dominique will do the batteries, too. 2028—I think I will not explain more than Dominique.

Régis Schultz: I will do the last two, and Dominic will do the back two. 2028, I think I will not say more than Dominic. I think that on your specific question around how we look around buying, I think that we have not seen on macro, there is no element that say that there is something very different than what we have seen today. I think we are not expecting something new. We continue to see the trends around running, and we continue the investment around there. We continue to see the same momentum around the key brand. There is nothing that has dramatically changed, and we do not see something dramatically changing. Do not forget that it takes time to build franchise and it takes time to get there. I think the best example is Salomon XT-6. We start with XT-6 four years ago.

Speaker #9: But on your specific question around how we look at buying, I think that we have not seen, on a macro level, any evidence or elements that suggest there is something very different than what we've seen today.

Speaker #9: So, I think we are not expecting anything new. We continue to see the same trends around running and the investment in that area. We continue to see the same momentum around the key brands.

Régis Schultz: We continue to see the same momentum around the key brand. There is nothing that has dramatically changed, and we do not see something dramatically changing. Do not forget that it takes time to build franchise and it takes time to get there. I think the best example is Salomon XT-6. We start with XT-6 four years ago.

Speaker #9: So, there's nothing that has dramatically changed, and we don't see something dramatically changing. Don't forget, it takes time to build a franchise, and it takes time to get there.

Speaker #9: I think the best example is Salomon XT6. We started with the XT6 four years ago. I remember I was there, and we said we're going to push Salomon.

Régis Schultz: I remember I was there, and we say we are going to push Salomon. It has take three years to get to something which is starting to be meaningful, and it is starting to really look at a key franchise worldwide. It takes time, and I think you need to not forget, if you scale a franchise too quickly, you kill it right away. Whoever you are, customer needs time to build franchise. I think XT-6 is, for me, the best example. It is a key franchise. It is now part of our top 10, and it is working everywhere. But it has taken four years to get that to what is today a significant shoe. It will not be right for any brands to believe that you can do in one year, launching a franchise and scaling. That will destroy each franchise.

Speaker #9: And it has taken three years to get to something which is starting to be meaningful, and they're starting to

Speaker #12: really look at a key franchise worldwide. So it takes time, and I think you need to not forget it's not a

Speaker #9: If you scale a franchise too quickly, you kill it right away. And whoever you are, customers need time to build a franchise. And I think XT6 is, for me, the best example.

Régis Schultz: I think XT-6 is, for me, the best example. It is a key franchise. It is now part of our top 10, and it is working everywhere. But it has taken four years to get that to what is today a significant shoe. It will not be right for any brands to believe that you can do in one year, launching a franchise and scaling. That will destroy each franchise.

Speaker #9: It's a key franchise. It's now part of our top ten, and it's working everywhere, but it has taken four years to get to what is today a significant shoe. It would not be right for any brand to believe that you can do this in one year.

Speaker #9: Launching a franchise and scaling—that will destroy each franchise. And we have seen that every attempt from the brand to go to scale too quickly, they kill the franchise.

Régis Schultz: We have seen that every attempt from the brand to go to scale too quickly. They keep the franchise they want to keep. This is about fashion, and this is about fashion trends, and that needs to be nurtured, to be developed at the speed that is in line with the consumer. So, no big change for 2028 as we speak today. In terms of the industry, I think your question is a good question around promotional. I think it will stop to be promotional when everyone will recognize what we said two years ago, which is a maturing market. When people will stop to believe that it is a double-digit market, they will stop to buy stupidly and too much. I think that our key competitor has been great in doing the wrong things, which is to say everything will go on in September.

Speaker #9: They want to do. So, this is about fashion. This is about fashion trends, and that needs to be nurtured, to be developed at the speed that is in line with the consumer.

Speaker #9: So, no big change for 2028 as we speak today. In terms of the industry, I think your question is a good one.

Speaker #9: Around promotion, I think it will stop being promotional when everyone recognizes what we said two years ago, which is a maturing market.

Régis Schultz: I think it will stop to be promotional when everyone will recognize what we said two years ago, which is a maturing market. When people will stop to believe that it is a double-digit market, they will stop to buy stupidly and too much. I think that our key competitor has been great in doing the wrong things, which is to say everything will go on in September.

Speaker #9: When people stop believing that it's a double-digit market, they will stop buying stupidly and too much. And I think that, you know, our key competitor has been great at doing the wrong things, which is to say everything will go rosy in September.

Speaker #9: We were proved to be right. At that time, you were looking at us, saying, "Well, I think that—" So, this is a, you know... As soon as everyone recognizes that this is an industry that is maturing—a sneaker is the best shoes in the world, is the most popular shoes in the world—but it is now 60% or 55% of the market.

Régis Schultz: We were proved to be right at that time. You were looking at us saying, "Well, I think that" As soon as everyone will recognize that this is an industry that is maturing, a sneaker is the best shoes in the world, is the most popular shoes in the world, but it is now 60% or 55% of the market. That means that the double-digit growth that we experienced in the last 10 years would not happen. I think that as soon as everyone recognize that, they will stop to buy for a market that doesn't exist, and that means that you will not have excess stock. That's as simple as that. We are in that place, and you have seen how disciplined we are in our buy. We need the industry to recognize the same and to be as disciplined as we are.

Speaker #9: So, that means that the double-digit growth we experienced in the last 10 years will not happen. I think as soon as everyone recognizes that, they will stop buying for a market that doesn't exist.

Régis Schultz: I think that as soon as everyone recognize that, they will stop to buy for a market that doesn't exist, and that means that you will not have excess stock. That's as simple as that. We are in that place, and you have seen how disciplined we are in our buy. We need the industry to recognize the same and to be as disciplined as we are.

Speaker #9: And that means that you will not have excess stock. So it's as simple as that. So, you know, we are in that place, and you have seen how disciplined we are in our buy.

Speaker #9: We need the industry to recognize the same and to be as disciplined as we are.

Speaker #10: And Grace, just to come back on the back-to-school point, I'm not going to give specific numbers on that. It would be spurious accuracy if it had a small impact.

Dominic Platt: Grace, just to come back on the back-to-school point, I'm not going to give specific numbers on that. It would be spurious accuracy if it had a small impact. I think the bigger point to bear in mind is what we said is, we don't really see the underlying market conditions changing from Q2 into Q3 and Q4 around where we are in the footwear cycle, where our consumer is, and the resultant promotional backdrop that we're operating in. I think those are the key factors.

Speaker #10: I think the bigger point to bear in mind is what we said: we don't really see the underlying market conditions changing from Q2 into Q3 and Q4, around where we are in the footwear cycle.

Speaker #10: Where our consumer is, and the resultant promotional backdrop that we're operating in, are key factors. So I think those are the key factors.

Speaker #9: Okay, great. Very interesting color. Thank you both.

Grace Smalley: Okay, great. Very interesting color. Thank you both.

Speaker #8: Our next question will come from David Hughes with ShoreCap. Please go ahead. Good morning, all. Thanks for taking my question. A couple from me.

Operator: Our next question will come from David Hughes with Shore Capital. Please go ahead.

David Hughes: Morning, all. Thanks for taking my question. A couple from me. Firstly, just in terms of capital allocation, obviously you have increased the dividend payout this year. In terms of your dividend coverage, you have still got quite a lot of capacity there. Do you have a target coverage or a target yield that you are looking to get to in terms of shareholder returns? Secondly, in terms of the opportunity in Mexico that you recently announced, obviously you are planning the 140 stores as a first blush. How much do you think you potentially could get to in the medium term? Do you have an outlook there that you are targeting? Thanks.

Speaker #8: Firstly, just in terms of capital allocation, obviously you've increased the dividend payout. This year, in terms of your dividend coverage, you've still got quite a lot of capacity there.

Speaker #8: Do you have a target coverage or a target yield that you're looking to get to in terms of shareholder returns? And then secondly, in terms of the opportunity in Mexico that you recently announced, obviously you're planning the $100 million and 140 stores as a first blush.

Speaker #8: How much do you think you could potentially get to in the medium term? Do you have an outlook there that you're targeting?

Speaker #8: Thanks.

Speaker #10: Okay, Dominique will do the Capitolo, and I do—yeah, so the sexy Mexico. Sexy Mexico, yes, I get it. Sexy capital allocation. So, morning, guys.

Régis Schultz: Okay. Dominic will do the capital and I do-

Régis Schultz: Okay. Dominic will do the capital and I do the sexy Mexico.

Dominic Platt: Yeah

Régis Schultz: the sexy Mexico.

Dominic Platt: Sexy Mexico, yes. I will get the sexy capital allocation. Morning, David. It is a really good question. I think our dividend increase of 21% really reflects the increase to the dividend that we made for the full year last year, where we updated our capital allocation policy. Clearly, beyond investing in the business, which we continue to do, maintaining leverage headroom for the buyouts of Genesis for adoption in 2 to 3 years' time. Beyond that, shareholder distributions is a key part of our overall strategy in capital allocation. We have a rolling GBP 200 million share buyback, and that is, we are well through that for this particular year. At the full year, we said that we would grow our dividend in a progressive way over time to get to have a yield in line with the sector.

Speaker #10: It's a really good question. I think our dividend increase of 21% really reflects the increase in the dividend that we made for the full year.

Speaker #10: Last year, we updated our capital allocation policy and, clearly, beyond investing in the business, we continue to maintain leverage headroom for the buyout of Genesis Foot Option in two to three years’ time.

Speaker #10: Beyond that, shareholder distribution is a key part of our overall strategy and capital allocation. We have a rolling $200 million share buyback, and we're well through that for this particular year.

Speaker #10: And at the full year, we said that we would grow our dividend in a progressive way over time, to get to be— to have a yield in line with the sector.

Speaker #10: Now, I think you know that the sector is around 2%+, but below that at the moment. We're not rushing to that, but with, you know, around a 20% increase in the full-year dividend last year, you can see our intent, and we will deliver that over time.

Dominic Platt: Now, I think you know the sector is around 2% plus. We are below that at the moment. We are not rushing to that, but with around a 20% increase in the full-year dividend last year, you can see our intent, and we will deliver that over time.

Speaker #10: Great, thank you.

David Hughes: Great, thank you.

Régis Schultz: Mexico side. I was waiting for. So sorry. I was not there. So Mexico. So 140 stores. I think the main opportunity is not the number of stores, it is the size of the store. I think what we are taking over is small store. It was a tough branded. It was only footwear. The project is around creating a very distinct offer. I think this is where it is very interesting for you because it shows how they did not need us because they already existing, they already have all the brands and all the staff, but they believe that the JD format is a much more powerful format and much more sustainable format, and they wanted to invest and to pay us royalty in order to get access to our knowledge, our savoir faire.

Speaker #9: So, sorry, I was not there. So, Mexico—so 140 stores. I think the main opportunity is not the number of stores; it's the size of the stores.

Speaker #9: I think that what we are taking over is a small store. It was a tough branded, it was only footwear. And the project is around creating a very distinct offer.

Speaker #9: And I think this is where it's very interesting for you, because it shows how they didn't need us, because they already existed; they already have all the brands and all that stuff. But they believe that the JD format is a much more powerful format and a much more sustainable format.

Speaker #9: And they wanted to invest and pay us royalties in order to get access to our knowledge and our supply chain. And I think that shows you how strong JD is in its proposition and concept, and how we are able to create value.

Régis Schultz: I think that shows you how strong JD is in proposition and concept and how we are able to create value. So that is the purpose of it. Grupo Axo feel that we were adding much more value to the proposition than the current proposition that they had. In term of number of stores, I do not think it is a lot more store, but it is definitely bigger, better store, and that is what we are embarking on, is to extend, to create a real destination, a real offer where you have footwear and apparel together, which create a distinctive concept and really leverage the position. So that is all about the project.

Speaker #9: So that's the purpose of the— Axo feel that we were adding much more value to the proposition than the current proposition that they had.

Speaker #9: And in terms of number of stores, I don't think it's a lot more stores, but it's definitely bigger, better stores. And that's what we are embarking on: to extend, to create a real destination, a real offer where you have footwear and apparel together, which creates a distinctive concept.

Speaker #9: And really leverage your position. So that's all about the project.

Speaker #8: Great, thank you very much. Our next question will come from Kate Calvert with Investec. Please go ahead.

Operator: Great. Thank you very much.

Operator: Great. Thank you very much. Our next question will come from Kate Calvert with Investec. Please go ahead.

Régis Schultz: Also the question.

Operator: Our next question will come from Kate Calvert with Investec. Please go ahead.

Speaker #4: Morning, everyone. Just two for me. The first question, again, on Mexico, and I suppose following on from your answer to the Eastern European—

Kate Calvert: Morning, everyone. Just two for me. The first question, again on Mexico, and I suppose following on from your answer to the Eastern European franchise. I suppose Mexico is actually a very large market. Could you talk about your thinking behind why you went in by franchise, rather than perhaps using your own expertise from some of your US formats like Shoe Palace and doing it yourself, because obviously it is a very attractive long-term market. My second question is just on North America. I was quite interested, Regis, on your comments that you had a good opportunity in the US for womenswear. This is an area that JD has struggled in the UK historically. Do you think your consumer perception of the JD brand is slightly different over there, in terms of being slightly more female friendly?

Speaker #14: I suppose Mexico is actually a very large market, so could you sort of talk about your thinking behind why you went in by franchise, rather than perhaps using your own expertise?

Speaker #14: From some of your U.S. formats, like Shoe Palace and doing it yourself, because obviously it is a very attractive long-term market. And my second question is just on North America.

Kate Calvert: My second question is just on North America. I was quite interested, Regis, on your comments that you had a good opportunity in the US for womenswear. This is an area that JD has struggled in the UK historically. Do you think your consumer perception of the JD brand is slightly different over there, in terms of being slightly more female friendly? Or are you thinking of doing something slightly different versus what you have been doing in the UK and Europe? Thanks.

Speaker #14: I was quite interested, Rujia, in your comments that you had a good opportunity in the U.S. for womenswear, as this is an area that JD has struggled with.

Speaker #14: In the UK, historically, do you think your consumer perception of the JD brand is slightly different over there, in terms of being slightly more female-friendly? Or are you thinking of doing something slightly different versus what you've been doing in the UK and Europe?

Kate Calvert: Or are you thinking of doing something slightly different versus what you have been doing in the UK and Europe? Thanks.

Speaker #14: Thanks.

Speaker #4: Thank you, Cato. So, question. Mexico, as I said, there are three criteria: size—and you're right, size is there—the access to property,

Régis Schultz: Thank you, Grace. Good question. Mexico, as I said, there is 2 criteria, size and right size is there. The access to property is not there. So if you are not a local player, you do not access property. So that has been easy to do business or not, and it is not always easy to do business in Mexico. Currency, security. So that is the 2 criteria. So there is 2 criteria. The size criteria is definitely on doing by ourselves, but on the property access and on the way to do business, it is definitely a franchise market for us. It is interesting when you talk with our American colleague, they see Mexico as a very difficult place. So they were not rushing to get there because they had the opportunity with Shoe Palace. Shoe Palace does not have a franchise as strong model as JD to go there.

Speaker #9: ...is not there. So, if you are not a local player, you don't access property. So, that has been an easy-to-do business or not, and it's not always easy.

Speaker #9: Easy to do business in Mexico, currency, security—so that's the two criteria. So there are three criteria. The size criteria is definitely on doing it by ourselves, but on the property access and on the way to do business, it is definitely a franchise market for us.

Régis Schultz: The size criteria is definitely on doing by ourselves, but on the property access and on the way to do business, it is definitely a franchise market for us. It is interesting when you talk with our American colleague, they see Mexico as a very difficult place. So they were not rushing to get there because they had the opportunity with Shoe Palace. Shoe Palace does not have a franchise as strong model as JD to go there.

Speaker #9: And that's what — and it's interesting, when you talk with our American colleagues, they see Mexico as a difficult, a very difficult place. So they were not rushing to step there because they had the opportunity with ShoePass, and ShoePass doesn't have a franchise and a strong model as JD to go there.

Speaker #9: But so it's definitely that, which is the same as Indonesia, same as the Philippines, the same as South Africa, the same as the Middle East. You know, it's all these countries where we believe that it's much better to have local partners than to operate by ourselves.

Régis Schultz: So it is definitely that, which is the same as Indonesia, same as Philippines, the same as South Africa, the same as Middle East. It is all these countries where we believe that it is much better to have a local partner than to operate by ourselves. In term of the womenswear, I think we see the same things in UK. We have done a very good job to increase our range in womenswear. I think that in UK proved to be beneficial in the same as we do in US. It is all about finding the speed to market. I think we had a model that was too slow, that was right for men. Men are boring, but women need more change and more diversity.

Speaker #9: In terms of the womenswear, I think we see the same things in the UK. We have done a very good job to increase our range in womenswear.

Speaker #9: And I think that in the UK, it proved to be beneficial, the same as we do in the US. It's all about, you know, finding the speed to market.

Speaker #9: And I think we were— we had a model that was too slow, that was right for men. Men are boring, but women need more change.

Speaker #9: And more diversity. And I think that we have built this model very successfully with Adidas, with drops every six weeks, which is something that I'm used to.

Régis Schultz: I think that we have built this model very successfully with Adidas, with drop every 6 weeks, which is something that I used to do when I was working with Zara. So I think we are finding the recipe, and it is all about product, and all about the ability to connect. I think that we have a good connection with the woman customer in 2 products in US, and that is where we are investing, and that we are seeing some really very good results in the last 12 months.

Speaker #9: To do when I was working with Zara. So I think we are finding the recipe, and it's not a— it's all about product and all about the ability to connect.

Speaker #9: And I think that we have a good connection with the women customer, uh, through product in the US, and that is where we are investing, and we are seeing some really very good results in the last 12 months.

Speaker #9: Great, thanks very much.

Kate Calvert: Great. Thanks very much.

Speaker #8: Our next question will come from Wendy Lu. Please unmute your line and go ahead. You can unmute by pressing star 6 on your line.

Operator: Our next question will come from Wendy Liu. Please unmute your line and go ahead. You can unmute by pressing star six on your line. Thank you. Wendy, you unmuted and remuted. If you would like to press star six again, that should unmute your line. Thank you.

Speaker #8: Thank you. Wendy, you unmuted and then remuted, so if you would like to press star 6 again, that should unmute your line. Thank you.

Speaker #11: Sorry, can you hear me okay? Hi, can you hear me okay? Yes, yes. Hi, Wendy. Hi. Hi. Hi. I just have a quick follow-up question from Grace's questions earlier.

Wendy Liu: Sorry, can you hear me okay? Hi, can you hear me okay?

Régis Schultz: Yes, we can. Yes.

Wendy Liu: Hi. Thanks so much for taking my questions. I just have a quick follow-up question from Grace's questions earlier on footwear growth. I wanted to understand what is required for footwear to go back to growth. I guess two questions here. One is, how do you feel about newness coming from major brands over the next couple months and quarters? Two is, I think you mentioned that the industry probably is too complacent on building inventories on footwear, but you seem to be relatively, I think, comfortable with your footwear inventory. I was wondering if you can comment on, I guess, how do you feel about your footwear inventory, both from in terms of size and value, but also in terms of composition.

Speaker #11: On footwear growth, I wanted to understand what is required for footwear to go back to growth. I guess two questions here. One is, how do you feel about newness coming from major brands over the next couple of months and quarters?

Wendy Liu: Two is, I think you mentioned that the industry probably is too complacent on building inventories on footwear, but you seem to be relatively, I think, comfortable with your footwear inventory. I was wondering if you can comment on, I guess, how do you feel about your footwear inventory, both from in terms of size and value, but also in terms of composition.

Speaker #11: I think you mentioned that the industry probably is too complacent on building inventories on footwear, but you seem to be relatively, I think, comfortable with your footwear inventory.

Speaker #11: I was wondering if you can comment on, I guess, how do you feel about your footwear inventory both from in terms of, you know, size and value, but also in terms of composition.

Speaker #9: Yeah, I think that, you know, we feel— we will not say something different— we feel good. But, you know, it's a sweet spot. We always have too much of the things that are not good enough and not enough of the goods that are selling.

Régis Schultz: Yeah, I think that we feel, will not say something different, we feel good. But this is retail. We always have too much of the things that is not good enough and not enough of the goods that is selling. So this is about retail. But we are in a normal position where, I wish to have a little bit more some of the products, and I wish to have a little bit less on some other. But I think it's what we manage, and this is what we have managed successfully in the last 10 years, and I think that our track record on managing inventory is there. In term of the industry for footwear, yeah, I think it's a good question. I think the first thing is what you said before, and what we said before, is to have a good stock position in the industry.

Speaker #9: So this is about retail, but we are in a normal...

Speaker #4: Position where, yeah, I wish to have a little bit more of some of the products, and I wish to have a little bit less on some others.

Speaker #4: But I think it's what we manage, and this is what we have managed successfully in the last...

Régis Schultz: But I think it's what we manage, and this is what we have managed successfully in the last 10 years, and I think that our track record on managing inventory is there. In term of the industry for footwear, yeah, I think it's a good question. I think the first thing is what you said before, and what we said before, is to have a good stock position in the industry.

Speaker #9: Ten years, and I think that our track record around managing inventory is there. In terms of the industry for footwear—yeah, I think it's a good question.

Speaker #9: I think the first thing is what you said before—which is, and what we said before—is to have a good stock position in the industry. Because, you know, if you have too much of something, as it is today, you have discounts and customers waiting for the next discount to come.

Régis Schultz: Because if you have too much of something, and as it is today, you have discounts and customer waiting for the next discount to come. Because it's interesting to see that in Europe and UK, it's mostly driven by a lower ATV, so a lower average value, that is driving the slightly positive in UK and slightly negative in Europe. But this is mostly around the average value, which I think is about a reflection on two things. There is too much product on there, so they're waiting for the discount to come, and they don't buy the things. And some appetite about something new and exciting, because at that moment, paying 120 or 150 doesn't matter if that's the shoes you want. So it's a little bit of two.

Speaker #9: Because it's interesting to see that in Europe and UK, it's mostly driven by a lower ATV, so a lower average value. That is driving the slightly positive in UK and slightly negative in Europe.

Speaker #9: But this is mostly around the average value, which I think is about a reflection on two things. There is too much product on there, so they're waiting for the discount to come.

Régis Schultz: There is too much product on there, so they're waiting for the discount to come, and they don't buy the things. And some appetite about something new and exciting, because at that moment, paying 120 or 150 doesn't matter if that's the shoes you want. So it's a little bit of two.

Speaker #9: And they don't buy the things, and there's some appetite for something new and exciting, because at that moment, you know, $120 or $150—it doesn't matter if that's the shoes you want.

Speaker #9: So it's a little bit of two. In the US, it's more around, you know, high-demand products and the fact that there are products that everyone wants to buy and is rushing to.

Régis Schultz: In US, it's more around high-end product and the fact that there are products that everyone wants to buy and are rushing to. I think it's about creating the heat in the industry, but the main element is stop the promotional activity where a customer can wait for next month to get a better deal. That is, I think for me, the first element. After that, the heat will come. We know it's always helpful when there's heat created by the market leader, which is not today the case. But we see some great things happening. You have seen what we have seen during the summer with Samba Jane ballet shoes from Adidas. We are seeing that on trail shoes. We are seeing that through Salomon XT-6. So there is elements of that.

Speaker #9: So, I think it's about creating ease of purchase in the industry, but the main element is to stop the promotional activity where customers can wait until next month to get a better deal.

Speaker #9: And that is, I think, for me, the first element. And after that, it will come. We know it's always, you know, always helpful when there is a, uh, created by the market leader, which is not today the case, but we see some great things happening.

Régis Schultz: After that, the heat will come. We know it's always helpful when there's heat created by the market leader, which is not today the case. But we see some great things happening. You have seen what we have seen during the summer with Samba Jane ballet shoes from Adidas. We are seeing that on trail shoes. We are seeing that through Salomon XT-6. So there is elements of that. It is true that having the market leader being in a leading position, especially in the US, it is part of the recipe to have a market that is in a better shape.

Speaker #9: Uh, you have seen what we have seen during the summer with the Samba Jane ballet shoes from Adidas. We have seen that with—on boutiques.

Speaker #9: We are seeing that through Salomon, so there is an element of that. It's true that having the market leader in a leading position, especially in the US, is part of the recipe to have a market that is in a better shape.

Régis Schultz: It is true that having the market leader being in a leading position, especially in the US, it is part of the recipe to have a market that is in a better shape.

Speaker #8: Thank you very much. Thank you. Well, there are no further questions on the webinar, so I'll now hand back over to management for closing remarks.

Wendy Liu: Thank you very much.

Operator: Well, there are no further questions on the webinar, so I will now hand back over to management for closing remarks.

Speaker #9: So, thank you for your question. It's always better to have it in person, but I hope you will enjoy Adidas Innovation Day.

Régis Schultz: Thank you for your question. It is always better to have it in person, but I hope you will enjoy Adidas Innovation Day. I was talking with John and Matthew yesterday, so they were very stressed to make sure that they showcase in the best way possible innovation and running. Hope you enjoy your day in Herzogenaurach, and looking forward to see you next time in person. Thank you.

Speaker #9: with Bjorn and Mathieu yesterday. They were very stressed to make sure that they showcased, in the best way possible, innovation and running.

Speaker #9: So, hope you enjoy your day in Oslo, and I'm looking forward to seeing you next time in person. Thank you.

Operator: Thank you for joining today's call. You may now disconnect.