Please go ahead.
Good morning, everyone, and thank you for joining this JD Sports Fashion PLC trading update, covering the outcome of the financial year to January 2024, and guidance for the new financial year ending January 2025. I'm Dominic Platt, the CFO, and with me on this call is Régis Schultz, the CEO.
Hopefully, you've had a chance to see our statement early this morning, and on this call, I will give a brief summary of the statement, and I'll hand back for questions. We ended the financial year to January 2024 with PBT before adjusted items in line with the revised guidance of GBP 915-935, which we gave at our early January update. The final result will, of course, be announced as our prelims. Q4 like for like was marginally ahead of the prior year.
This should be seen against the strong comparative in the prior year, which saw Q4 up almost 20% on a like-for-like basis. January was as expected and reflected the elevated promotional activity, we have seen through peak, particularly online. Footwear again outperformed apparel in January. Overall, for the year, we once again outperformed in what was a challenging market with over 8% organic sales growth split fairly equally between like-for-like growth and new space.
Our athleisure fascias, mainly JD and our U.S. community brands, delivered organic growth of over 10%. This growth was achieved despite less product innovation and elevated promotional activity, particularly online, seen through most of Q4. Total sales were GBP 10.5 billion, up 3.6%. This is net of a 6.2% impact from disposals, and we benefited by 1.4% from the 53rd week.
Looking at the regions, UK, Republic of Ireland, like-for-like sales were down 3.2% in Q4, but up 0.8% in the year. Q4 was impacted by the UK having the highest level of apparel sales mix in the group and apparel sales being weaker than footwear, and by our decision to not fully participate in the elevated promotional activity in the UK.
Europe like-for-like sales were up 0.9% in Q4 and up 7.7% in the year. The apparel factor also impacted in Europe, where Southern Europe benefited from having a lower apparel mix than the North. Our strong JD-led store opening program meant organic growth was up 8.9% in Q4 and 15.3% for the full year.
In North America, Q4 like-for-like sales are up 2.1%, despite a promotional January and a 30%+ comparative last year. Store openings also drove strong organic growth of 7.7% in Q4 and 9.3% in the full year. Finally, in Asia Pacific, Q4 like-for-like sales were up 8.3% and up 11.8% for the full year. New Zealand and Thailand performed particularly well. New store openings in this region also drove good organic growth, with Q4 growth of 12.3% and full year growth of 17.7%. I'd also like to pick up a few strategic highlights.
We opened 215 new JD stores in the year, hitting our ambitious targets in both North America and Europe, and we took full operational control of ISRG and MIG, allowing us to accelerate JD conversions in Southern and Eastern Europe, and also enhance earnings. We launched our loyalty program, JD Status, in the UK. We have already around 800,000 app downloads.
Finally, on the balance sheet, we ended the year with just over GBP 1 billion net cash on the balance sheet and inventory levels that we are comfortable with. I'd now like to update you on three forward-looking items: our initial guidance for FY 25, a change in accounting policy, and new segmentation for FY 25. On guidance, we are guiding to PBT before adjusted items of GBP 900-980 million for FY 25.
There are some key assumptions behind this, which I'd like to share. Firstly, we are assuming like-for-like sales growth will be between 1% and 4% growth, which reflects a range of market growth estimates we are seeing across market participants. The current market remains challenging, with less product innovation and elevated promotional activity, particularly online across our markets.
The outcome will depend very much on the rate of improvements in the market environment and product innovation across our markets as the year progresses, with any improvements likely to be in the latter part of the year. As such, given comparatives, Q1 and H1 like-for-likes are likely to be softer, with H2 stronger than H1.
Secondly, we anticipate new space to be around 5%, slightly higher than FY 2024, due to a marginally earlier rollout of new stores through the year and the second year benefit of the elevated store opening program in FY 2024. This would take organic growth range guidance from 6%-9%. To complete the picture on total sales, there will be a circa 2% reduction from the FY 2024 disposals that we have made and around a 1.5% reduction from the 53rd week.
Thirdly, while positive LFLs and our store opening program will improve profits, we do continue to see the impact of inflation, not least high national minimum wage increases, and that's not just in the UK, but across a number of our markets. In addition, PBT will be impacted negatively by around GBP 30 million from a number of other factors.
We're increasing our investment in cyber and tech, much of which now falls into operating costs. We lose the benefit of a 53rd week, and we'll see an impact from the non-trading of top ISRG and MIG stores as we accelerate the conversion to the JD brand, having taken full control of those businesses. Beyond that, we will continue to have the dual running costs that we have talked about, maintained at similar levels through FY 2024.
We expect this continued investment to start delivering clear financial benefits as we move into FY 2026. We're just 7 weeks into the new year, so the only comment we'll make today on current trading is that we are trading in line with our expectations. We will report on Q1 at our full year results at the end of May. Now on to accounting policy.
We'll be moving amortization of acquired intangibles into adjusted items, putting us in line with the majority of large U.K. listed retailers. This will be in place for FY 25, and the main impact will be to increase PBT by around GBP 55 million. Consequence of this is that our guidance for FY 25 will move to GBP 955 million-GBP 1,035 million.
This is how we will talk about in the future and how you should think about the range for FY 25 going forward. And on segmentation, we will be changing it from FY 25 to better align the operating segments with our long-term strategic plan. We will provide historical information at our full year results to help you start remodeling to reflect the new strategy. Finally, I wanted to update on our reporting schedule.
Coming into the group, I have reviewed how and when we communicate, and as a result, we will be moving to a more regular reporting cycle with quarterly trading statements. The proposed timings are in the release. We're aiming to announce our prelims at the end of May.
This is later than we would expect in the future, but this year reflects the impact of me as a new CFO and a new auditor in what is a large and complex group. So that's it from me. Hope you found this useful. So now I'll hand back to the moderator, and we're ready to take any questions you may have.
Thank you. Ladies and gentlemen, if you would like to ask a question or make a contribution on today's call, please signal by pressing star one on your telephone keypad. To withdraw your question from the queue, please press star two. So again, that is star one for your questions today. And our first question comes from David Roux of Bank of America. Please go ahead.
Good morning, gentlemen, and well done on a good result today. I've just got three questions from my side. The first one, could you perhaps just touch on the phasing between 1H and 2H with regards to like-for-like, and then also PBT? I think historically you've spoken about PBT in 1H being about 35%-40%.
The second point is just on the store cadence. 215 stores is a decent number, but it's still a bit below the midterm target of 250-350. Should we still be expecting that as achievable over the medium term per annum? And then, my last question is just down to the GBP 30 million incremental cost that you flagged. How much of this should we see as temporary and will reverse in FY 26? Thank you.
Okay, so picking up on the first half, second half point, if you look at our comparatives, well, from last year, we had incredibly strong Q1 with like for likes of mid- to mid-double-digit, around 15%. And the comparatives then get softer as you go through the year. So that will play to things being tougher in the first half and then easier in the second half as comps get easier.
As we look through to the rest of the year, one of the things I think that we're seeing at the moment is a weaker product cycle. As we move into H2, we'll have the Olympics and some sporting events, like other sporting events like the Euros, which always help to boost performance.
Then we do start to expect to see some product innovation starting to play through. The timing of that, to be fair, David, is I think not an if, it's just a case of when and when it comes in H2. You know, in terms of the sort of uptick in the second half, that will be partly dependent on when that comes through. PBT wise, as you're right, we've typically had around 35% in the first half, and 65% in the second half. 20% of our sales and about a third of our profit is made in the peak season.
We'll provide more updates on that as we get to the full year results and have a better view of how things are panning out. On the store cadence, 215 stores, that's JD. We're also opening stores under other fascias, Shoe Palace and DTLR, and Sprinter in Spain, among others. So that does take the tally up.
And of course, I think the overall store rollout does include franchises, and we'll start to see some of those coming through through this year. Smaller numbers at this point in time, but that will start to build now that we've also signed the South African franchise agreement. And then in terms of the GBP 30 million, three... Sorry for one sec.
Part of that's the 53rd week. So, if you break it into thirds, possibly for a simple, simple calculation, David, clearly, we won't have a 53rd week for the next two years. The investment in cyber, and IT OpEx, I think will continue for a part of time.
What we're now seeing is that a lot of what we do around those areas, because of sort of cloud type arrangements, ends up as license fees in operating profit rather than CapEx. The non-trading around Sprinter and MIG, I expect that, to fall away, and we will start to see the benefits of that as we convert those stores, into JD, into FY 2026. We are...
Also expecting to see some of the double running costs that we've been talking around, around GBP 10-12 million falling away in FY 2026 as the supply chain programs that we've been running start to land under the new structure we're putting in place.
Very clear. Thank you.
Thank you, David.
Thank you. We're now moving on to a question from Jonathan Pritchard of Peel Hunt. Please go ahead.
Thanks, and good morning to you, if I may. Firstly, Dominic, you just mentioned the product pipeline. Maybe for you, maybe for Régis, but could you just give us a bit more granularity? How much you like what you see. Obviously, you can't just bring in, you know, new innovative product overnight. How does that pipeline look? And perhaps break that down into footwear and apparel if you can.
But then, secondly, more strategically, I know we touched just now on store openings, but just going back to that Capital Markets Day last February, is there anything in what's happened in the last three to six months, you know, markets toughening, et cetera, is there anything there tipped over from sort of short-term tactical to longer-term fundamental to make you think that perhaps some of those targets, et cetera, and comments are no longer applicable? Are there any areas where things genuinely you think have changed?
Yeah. Let me take the two question. I think that, no, I think if we have to do the strategy today, I think we will, we'll do exactly the same. I think, you know, the strategy is, is about building our market share across, Europe and US, and I think that we have seen the return on our investment in opening doors in both country.
So I think that, that remains the priority around JD, I think is the right thing to do, and I think we will see the benefit coming. And I think that, we see how much it simplifies the group. We see the growth that coming from the transfer of store from other fascia to JD. So, so that's a key part of the strategy that has been put in place.
After that, when we share the strategy, we were doing plus 15% like for like. Today is a more challenging like for like because the market is more challenging. So I think that that's the only difference, but that is mainly a reflection on Nike being a little bit slow, banking too much on two key franchises, which are still our number one, number two product, but franchises that are starting to erode and consumer wanting new stuff.
And I think that we always say that we believe our customer is resilient as soon as we bring in a new product innovation. And when I'm saying innovation, this is fashion, so it's about color, material. It's not about finding a new technologies that transforms the world.
It's about having new silhouette. And I think that a good example of that is the excellent work that adidas is doing on the Samba and all the terrace trend. I think they bring it every month we have new release of the same silhouette, but with a little bit of twist and all that stuff, and that's working very well.
It works very well with size?, which is for us, an early sign of this coming for the market. I think Nike has been banging on the Air Force 1 and Dunk, and I think it's still selling very well. But I think we can see that it's starting to slow down and need something new to come and to refresh that. And I think that what we are seeing to...
For your first question on footwear, I think we are seeing all the small brand, if I may, coming with a lot of innovation, been very hot. I think Nike has been, and they recognize it, slow, and I think that they put their act together. We launched yesterday, Max Dn , which is a good launch for, and, and something that brings something to the product.
We see some product coming for end of year, mostly beginning of next year, that are exciting as a buyer and quite exciting. So I think it's the most important thing was for Nike to recognize that they need to bring something new, and I think it has been done publicly last week, so I'm not saying something different.
I think as soon as they put their act together, they have a strong brand that brings that. On apparel, so that's footwear. On apparel, I think that we see that fleece is lacking of interest from the consumer.
That we still don't know how much was driven by the fact that the weather was very hot during all, across all the winter, so we didn't have low temperature, which I think has an impact on that. But I think there is something around the material. We see woven and other material going much better. So I think we see that. I think that Nike, the same, has recognized that.
We are very excited about in the second half, having a, you know, a woven version of the Tech Fleece. So that would be exclusive to us because it's something we ask Nike to change the material. So I think that we see that happening. So I think it's, it is about bringing new product. And when we say innovation, we... This is fashion, so it's about silhouette, it's about material, color. It's not about finding a new technology that no one has seen before.
So it's about building a story for the consumer and for the consumer to feel that there is something new for them. But our plan remains the same, double, triple, double, double-digit growth. As you have seen, we deliver double-digit growth in our athletic leisure last year. So that's happening.
Double-digit margin, I think that where we will, we are building the infrastructure that will take more time than expect, because I think the infrastructure need more investment than what perhaps we, I initially think about it. Double-digit market share, it's happening, this is now the case in some country in Europe. We are getting closer to that in U.S. So I think we, we are committed to deliver that.
... Understood. Thank you very much.
Thank you. Up next, we have Monique Pollard from Citi. Please go ahead.
Hi. Morning, everyone. Thanks for taking my questions. The first question I had, Leon, for Régis, is just on whether you can take us through your Nike allocation for the second half of, well, your 25, the second half of calendar 2024.
Just given Nike's comments last week at their results, that they were scaling back products of legacy franchises in the second half of 2024 in anticipation of new product being rolled out next year. And the second question, just following up, Régis, on your comments on the Nike Tech Fleece. Obviously, at the January trading update, we'd heard that, you know, that one Nike Tech Fleece product was responsible for 70% of the apparel shortfall, but that you'd come to a new agreement on pricing.
Just wondering if that pricing change that you've made to that new version of the Tech Fleece has seen at least some improvement in the trading for that product? And then the final question I had was just on the like-for-likes. So, in the statement, you talked about the January like-for-likes being down, but mentioned that the comp was +25.
You've talked about obviously the Q1 like-for-likes being, the comp there being +15, but just wondered if there were any specific differences month to month, or whether we should think of sort of February, March, April all being about a +15% comp. Oh, hello. Can you hear me?
One second. Can you, can you hear us, Monique?
Yes, I can hear you. Can you hear me?
Could you just repeat? Could you just repeat? Well, should we, do you want to let Régis answer the first two questions, and perhaps if you come back with your third again, and then we'll pick that up. You broke up in the middle, unfortunately. Thank you.
All right.
Okay.
Perfect.
So Tech Fleece, I think, yes, it has been improved. I think that we had the better run from the time we have adjusted price. I think that we have done some markdown activity too, so I think that's something where we are now in stock where we believe we should be.
In terms of allocation, I think this is always a, you know, something where you need to understand that we have a three-year plan with Nike, and we have secure allocation for the coming three years. So there is no... When they say they reduce allocation, I think it's mainly around smaller retailer. Big retailer will be always have what we need to have. So I think there is no issue.
I think that they, what they mention is more a global strategy around the franchise. That is, around resetting the franchise. So I think that is more on the D2C operation, smaller retailer. But concerning ourselves, we have what we want to have in terms of Air Force 1 and Dunk. So there is no issue for us.
Excellent. My, my final question was just on the like-for-like. In the statement, you said that the comp for January was +25%, and you said that the 1Q like-for-like comp was +15-ish%. Just wondering if that 1Q comp was pretty even February, March, April?
Oh, okay, thanks. Thanks, Monique. I understand that now. It varied through the quarter, and I think, you know, one of the facts is that, for example, when Easter moves from one month to another, you end up with different phasing year-on-year. So I think we need to look at Q1 in the round.
Plus Ramadan.
Plus Ramadan, yes, because that does have an impact on some of our markets. So we have to look at Q1 in the round, so difficult sort of to call it completely, you know, after seven weeks. I think given the comparative, given the, you know, what we've talked about on product innovation, what we've talked about in terms of promotional market, and in places like the UK, where, you know, we actively on the online, try not to take, I think sort of a flat result in Q1 would be a good out, May.
Understood. Thank you.
Thank you. Up next, we're moving to Grace Smalley from Morgan Stanley. Please go ahead.
Hi, good morning, and thank you for taking my question. The first one would just be on the like-for-like guidance for this year. Could you help us with what you're embedding in terms of the growth between growth in units versus your expectation for pricing and then just product mix, given the different performance things you're mentioning by brand?
And then secondly, just on promotions. So you've said that the current environment remains challenging, it's still promotional, in particular online. That seems to be happening despite the fact that the inventory backdrop is improving.
Could you just elaborate on what you think is driving the promotions and your confidence in the ability to kind of wean the consumer off promotions, given it was very promotional last year, and kind of pull back on promotions while improving the like-for-likes as you move through the year? Thank you very much.
Yeah, so, yeah, so I think on the like-for-like, I think that, you know, it, it's, you know is driven by, so the like-for-like, as, as you say, we guide between 1%-4%, I think that, 1% is what most of our competitors have said. Externally, 4% is what the market, so some of the Euromonitor data is coming to.
So we, we believe that we usually outperform, or we have outperformed significantly our competitor in the past. At the same moment, we want to be... we, we want to, we have been burned by being too optimistic, so we want to be, conscious about the market we operate, and we want to make sure that, we are delivering what we say we will deliver.
So I think that's why we guide most to the 1%-2%, because that's something that we feel very comfortable about it. I think that it could be better than that. In terms of how it looks, in terms of price, this is, it is more driven by a different mix. So it is almost half price, half average transaction value, which is mainly driven by a mix, which is going more to footwear than apparel.
So it's not about the price that going up, it's more the mix, because as you know, footwear is driving a higher, higher average transaction values than apparel, and, and we see more strengths in footwear than apparel, and that is consistent with what we have seen in the end of last year.
So I think it's, it's mainly driven by volume, and, and a little bit of mix that is driving the ATV up. In terms of promotion, I think the promotion is mostly driven... I think that as you've seen most of our brand update was around the fact that stock in the market is in the right place. We are in the right place. We believe that most of our competitors are now there.
I think online promotion is more driven by some of the D2C and some of the pure player trying to buy sales because they, they struggle to deliver their objective in term of sales online. And I think it's, that's why it's, it's very focusing on online, and it's focusing on the, on the dying, business model, which was a pure player model.
I think we see the, the last, last chance or last drop of those, and that is the only way they can differentiate themselves from the market, is by doing promotion and, and selling cheaply, compared to the rest of the industry. So that is, I think, less and less the case because they get less and less capital, and, they are more and more struggling.
I think on D2C is more driven, some brands need that in order to drive their top line, so that can happen time after time. But, I think it was reassuring to have Nike saying that they will reduce their allocation to D2C and make sure that they are more disciplined around their pricing and promotion online.
Okay, thank you.
Thanks, Grace.
Our next question now comes from Warwick Okines from BNP Paribas Exane. Please go ahead.
Good morning. I've just got three quick ones, please. The first is that in your answer a moment ago, you talked about potentially an opportunity to open more DTLR and Shoe Palace stores. I wondered if your thinking had sort of changed about the opportunity for that. Secondly, wondering if you could just comment on the HOKA trial that you've been running in the UK, whether that could be more broadly rolled out. Thirdly, if you could just update us about the status of the Courir acquisition, please. Thank you.
Okay. So, I didn't get the third one.
Third one, update on Courir.
Okay. Okay, so I'll take. DTLR, Shoe Palace. No, I think it's a, you know, it's a reflection of the success of our community brand. I think, you know, we, you know, they, they have opportunity to open more doors. We have a new format with DTLR that works well. So I think it's, it's the same strategy. I think in the US, we are clear on our strategy.
There is JD, for, the A and B mall, the High Street. This is a brand that we want to build in the US, that I think is bringing something completely new in the US market, with a, a stronger mix in terms of apparel, with a much more modern look and modern feel.
I think we see a fantastic response, and we see the brand growing weeks after weeks, and we really development of JD in the US. At the same moment, there is a market in the US, which are a more community, you know, which is.
If I make the difference between the two, JD is a destination, is the A and B mall, is the store you take your car, it takes you half an hour, 45 minutes to get there, and you enjoy a fantastic experience. At the same moment, especially in the US, as sneaker with a, you know, you should always remind yourself that the per capita is double in the US compared to Europe.
So there is a market for, you know, the store downtown that you shop every day, that you walk to the store, and that is what our community store are doing. And I think we do a pretty good, a very good job with Shoe Palace on the West Coast, DTLR on the East Coast, and I think that we are gaining share, and we continue to develop this format because we believe it's an answer to the consumers that want to buy the sneaker close to their home and at a 15 walk, so. So that's for DTLR, Shoe Palace.
So nothing new, it's just that we get more allocation from Nike to develop more those two format, because they see that very successfully, and they want to back our development. Hoka is a fantastic brand. I think it's a good start in Liverpool. I think it's... You know, we keep investing in new brand, we keep developing new product, and I think it's something we will leverage if there is a customer demand. So that's- it's an answer to customer demand, but we- this show how much innovation we are bringing to the market, how...
How much our buyer are always sniffing for the, the last things coming and, and being able to convince the brand to come to our environment, because our environment is the best environment they can find to develop their brand and to have an experience for the consumer. On Courir, Courir is a, is a time to get through Europe.
I think that, you know, Europe is, is great on regulation and making business difficult to do. I think that, this is, this is life. So it's answering all the question that they are asking us. It take time. We will get there. It's just a question of timing.
Yeah. We'll update you when we have news, Warwick.
Thanks very much.
Thank you. Our next question now comes from Richard Chamberlain from RBC. Please go ahead.
Yeah, thanks. Morning, morning, guys. Question, probably for Dominic. I think, in the statement, you say that you ended the year with over GBP 1 billion of net cash. Last year, I think it was around 1.4, 1.47 billion. So I guess it's come down quite a bit year-on-year.
But I wondered if there are any timing adjustments sort of weighing on that cash position at the year-end, or actually, is the cash position sort of, you know, likely to be comfortably over GBP 1 billion? That's my first question. Then I just wanted to ask what's behind your assumption of low- to mid-single-digit market growth. I think you said that you base it on a number of sources.
But obviously, that's down quite a bit from the CMD last year, and I just wanted to confirm that you're not expecting to outperform the market on a like-for-like basis for the coming year. Thanks very much.
Yeah, Richard, thank you. So on the first question, yeah, we finished the year with just over a little, little over GBP 1 billion net cash, just down from GBP 1.4 billion last year. No timing issues that, of any materiality. Remember that we did buy out the minorities of ISRG, EUR 500 million, and the minority of MIG in Eastern Europe.
So those effectively played to, you know, reduce that cash. We continue to fund our CapEx out of free cash flow, but there are working capital investments required as we grow our store base. So I think the main, the main factors are really around those two minority share buyouts, the largest of which was ISRG. Looking to the growth, we talked about 1%-4%, and what informs that?
I think, you know, when you look at the Euromonitor and the other commentators, they're all sort of in that sort of mid-single digit, just up to mid-single digit growth. When you look at what players in the market are saying, there's been some recent announcements in the US, who I'm sure you'll, you know, you'll be more than aware of, they're talking about very low single digit, even zero in some cases.
And I think, you know, picking up Régis' comment, we, we have typically outperformed the market, so therefore, that's why we felt that 1%-4% is a good sort of range coming into the year. Sitting here today, what are the factors that are going to drive that from the 1% to the 4%?
I think, you know, clearly, we have strong comparatives in Q1 and therefore H1. We see it more back-end weighted. I think our comparatives get easier. There are the sporting events. I think the big determinant will be, you know, how that product innovation that Régis was talking about starts to come through in the second half.
I think it's a case of when, not if. But if it's later in the year, then I think we're probably more likely in the lower part of the 1-4. If it comes and starts to resonate with customer, probably in the higher part. Bit too early to tell at this point in time, Richard, if I'm honest.
So I think, you know, sitting here today being prudent, we're probably, you know, at the lower part of that 1%-4% range, just for the reasons that I, I've mentioned. And then going back to the CMD, I think at the time of the CMD, as Régis said, our like-for-likes were strong, but I think it's more importantly, the market was doing well. You know, all external commentators that, you know, I've seen at that time were looking at sort of mid-single digit compound growth through a period of time.
If you take our capital market day targets, it was effectively for double-digit growth, which, you know, with mid-single digit like-for-like, and 4% plus space growth over a medium term, you soon get to that double-digit number.
I think what's changed is that the underlying market has been softer than anyone expected, particularly in sort of the latter half of the last financial year and coming into this financial year, which is, you know, a combination of product innovation being slower. I think we've seen a customer that therefore may—our customer is resilient. It does have discretionary spend, but it will focus and spend that money when it's something interesting to buy rather than just, you know, the normal product.
So I think, you know, in every all the indicators we see is that this is cyclical, and that, you know, as the market returns more to the norm that people forecast, there's no reason why we shouldn't be heading back to those sorts of targets that we talked about, at the Capital Markets Day.
Great. That's very helpful, Dom. Thank you. And just to go back on the cash point then, you're not seeing or you're not expecting any sort of working capital build around year-end or sort of timing differences on-
No.
-working capital?
No, Richard, no.
Okay, got it. Okay, thanks a lot.
Thank you. As a brief reminder, that is star one for your questions today. We're now taking a question from Kate Calvert from Investec. Please go ahead.
Morning, everyone. Three for me, please. The first one, can we go back to Nike's call last week? They did very much talk about putting sport at the heart of their business and wanting its key wholesale partners to elevate their proposition. Now, you're less focused on sport, and obviously, some of the other players are more focused on sport.
Do you think that Nike's refocus might have to change the way JD thinks about the way it goes to market in the U.S. in particular? Second question is on your FY 25 guidance. Could you give some more detail on your underlying assumptions by region, please? I assume the U.K. profits are going to decline, but what are your sort of thinking currently around the U.S. and Europe?
My third question is, could you say what the profit benefit in FY 2024 is from the 53rd week? Thanks so much.
Okay, I will take the first one, Dominic, the closer. I think that, you know, I think what Nike was saying, and I think it's true, is that, you know, they are about sport, and I think it's always something we recognize, and I think we value, because that's where their roots are. We are about lifestyle, and we are doing something different.
And that's why, you know, looking at big picture, why JD has been such a great partner and why Nike has been such a great partner to us, is because we bring something different. They are about sport, we are about lifestyle, but lifestyle is the biggest part of the market today, and it has been the one that grow much faster than the rest. And I think that for...
So for us, this message about Nike around sport is more around, you know, bringing back to their roots. You know, a good example for me is Air. You know, we, you know, Air Max is, is one of the key franchises we have, is nowadays almost only a lifestyle one, and I think it's missing to have a sport element of it, because I think that, sport is bringing innovations, bringing new silhouette, and after that, it's transformed to lifestyle.
And I think what is lacking today and what they recognize, and I think the message they give, to the, to, to the public, is to say, "We need to make sure that we innovate in sport in order to translate that in lifestyle, to create, the it in lifestyle." And I think we are exactly in the same place.
So I think it's not something. I think we will benefit from that. I think what they mentioned around elevated experiences in sport area, because I think they feel that the sporting goods players are not doing as good a job as we are doing in the lifestyle, and that's the same. I think it's a key challenge they have to all the sporting goods players around the quality of what they deliver to the consumer and the quality of the experiences. I think that they are really happy about the experience with us. I think we are the number one partner in the world.
So I think that for us, this is music to our ears in the goods retailer arena and them going back to their roots and make sure that there is a component of sport in what they do for the consumer.
Kate, picking up your question on guidance, we're not giving detailed guidance by region. Obviously, report against that as we go through the year, but, you know, picking out the main regions, you know, our growth is driven in the U.S. and Europe.
They'll be the main sort of growth markets next year, and we expect to see profit improve on the back of that. In Europe, we should see a marginal improvement in profit margin, but actually, with some of the conversion costs and other things, double running costs that we have, we'll start to see that profit margin improvement, as well as absolute profit improvement coming more in the FY 2026 and beyond. U.K., you know, U.K., we're 30% market share.
This is not a growth market in the same way for us. And in a more depressed market, yes, you know, particularly when you've got things like national minimum wage increases, the investments we're making in some of the areas around tech and cyber, we could see the profit go back. We probably expect to see the profit go back in the UK, in this financial year. And then your last question was around the, profit impact of, the 53rd week, sort of GBP 10 million-GBP 15 million. That would be the number there.
Great. Thanks so much.
No problem. Thanks, Kate.
Thank you. As a final reminder, that is star one for your questions today. We will pause for a brief moment. There appears to be no further questions at this time.
Okay. Well, look, thank you all very much for joining our call this morning. It's good to catch up. We look forward very much to speaking to you again, towards the end of May, when we will provide our full year results in full. Thank you very much.