Good morning, everyone, and thank you for joining us. I'm Régis Schultz, CEO of JD Group, and I'm joined here today by Dominic Platt, our CFO, and also very happy to introduce Jiten Shah, our Chief Technology Officer, who is on our Q&A panel. The agenda for the day is the following. I will start with our key message and highlights for the year. I will hand over to Dominic to go through the financials and guidance. Finally, I will take you through the key business update. For today, I have five key message. First, everything start with the consumer. We are offering our customers the latest and the greatest world fashion product in our vibrant and elevated retail theater. This customer-first approach, combined with cost and capital control, delivered a resilient performance for JD against a tough trading environment.
Second, we are pleased Oh, I'm going too quickly, sorry. Second, we are pleased with our momentum in North America with a 3.2% organic growth, which is comparable to our main competitor definition of like for like. We have invested further in the JD brand and made significant operational improvement across the region. North America is now our first region in term of sales and in term of profit. Third, our free cash flow is up 36% year-over-year to GBP 462 million, supported by a 3% increase in our operating cash flow, which is the equivalent to EBITDA under old-fashioned accounting rules. In FY 2026, we reached GBP 12.7 billion turnover. It's compared to GBP 8.6 billion in 2022, achieving double-digit growth per year. We are now a double-digit market share in all our markets, North America, Europe, Australia, New Zealand, and U.K.
Our profit for FY 2026 is GBP 852 million, which is down GBP 100 million versus FY 2022, but our operating cash flow is up by GBP 200 million compared to 2022. This reflect the investment we had to make in staff cost to give our young colleagues an equal remuneration, in governance and in infrastructure, supply chain, cybersecurity system, in what was a underinvested business. Fourth, given our strong cash generation, which we expect will continue, we are announcing today a proposed 20% dividend increase for FY 2026 and a rolling GBP 200 million annual share buyback. Finally, our FY 2027 guidance is all about controlling the controllable and, for the consumer, advancing our five key strategic priority at pace. I will take you through each of these later.
Let me now hand over to Dominic to run through the financial result.
Good morning, everybody. Good to see you all, and thank you, Régis. I'll start with our headline financials. There we go. I'll start with our headline financials here on slide five. Unless stated otherwise, all commentary is on a constant currency basis. Total sales are up 11.7%, reflecting a full year of sales from Hibbett and Courir, which were acquired in July and November respectively in the prior year. As a reminder, we have restated our prior year gross margin following a reclassification between OpEx and cost of sales of certain costs related to commercial activities and logistics. This is to reflect more appropriate accounting presentation, as a result, FY 2025 gross margin has moved from 47.8% to 47%. In FY 2026, against a tough market backdrop in all our regions, we maintained our trading discipline.
To stay competitive and engage with our customers, throughout the year, we made controlled price investments, particularly in our online offer. The underlying impact of these investments was a reduction of 30 basis points. This was fully offset by marketing contributions, which were higher year-on-year. The corresponding marketing costs that are funded by these contributions are now classified in OpEx for accounting presentation purposes. Overall, statutory gross margin was therefore flat year-on-year. Operating costs were 14.6% higher, driven by costs related to organic new stores and the annualization of Hibbett and Courir. Excluding these items, 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 886 million, 4% lower, with an operating margin of 7%.
Profit before tax and adjusting items was GBP 852 million, 6.4% lower and in line with the guidance provided in our Q4 trading update. Our adjusted earnings per share were 5.5% lower on a reported basis at GBP 0.1171. For completeness, statutory PBT was GBP 629 million, 12% lower year-on-year. This reflects slightly higher adjusting items year-on-year, which consists mainly of non-cash impairment costs arising from actions we are taking to optimize the portfolio. Régis will cover this in more detail later. We generated free cash flow of GBP 462 million, up GBP 123 million or 36% year-on-year. This was supported by our cost and capital discipline.
Reflecting this strength, the board has proposed a total ordinary dividend of GBP 0.012 per share, 20% higher year-on-year. Moving now to our sales bridge year-on-year. The left-hand side rebases FY 2025 for an FX headwind of 1.2 percentage points, as well as for some small disposals from last year. Like-for-like sales were 2.1% lower. Net new space contributed 4.2 percentage points of sales. This demonstrates the productivity of our new space despite a net closure of 39 stores year-on-year. As a reminder, in line with most retailers, we include store relocations and upsizes in our new space definition. When you're benchmarking, it's worth noting that some of our peers do not.
Net space growth was supported by the opening of five flagship JD stores, including the Trafford Center in Manchester, where we continue to see very strong results. Overall, organic sales growth was 2.1%. Based on our analysis, leveraging internal resources, external panels, and peer data, we believe this is at least in line with the growth of our addressable markets. Completing the bridge, Hibbett and Courir added GBP 1.1 billion of sales for an overall sales growth of 11.7%. As you can see on this slide, the JD Group is a well-balanced, diversified, and global business. 75% of our sales come from North America, Europe, and Asia-Pacific, and we have significant runway to further grow our market shares in these regions.
Our channel mix varies by region, with online sales penetration in the U.K. at just over 25%, around 20% in North America, and in the high teens in Europe and Asia-Pacific. This provides ample opportunity for growth, particularly outside the U.K. As R é gis will touch on later, we've made significant progress in building out our fully flexible omnichannel proposition, and we're strengthening our ecosystem to meet customers wherever and however they choose to shop. Organic store sales grew by 2.2%, reflecting the continued resilience of our full-price model and our store opening program. Online sales were up 1%, with good growth in North America and Europe, supported by the ongoing evolution of our ranging and technology platforms. In the U.K., online sales were down in a more promotional market, reflecting near-term industry and consumer dynamics.
Turning now to category, our agile multi-brand, multi-category model provides natural diversification through our footwear, apparel, and accessories proposition. In footwear, organic sales were flat year on year. Throughout FY 2026, we saw a significant shift in the global footwear product cycle, given the transition between newer but smaller franchises and larger end of cycle lines. Reflecting the strength of our model, we saw strong growth across brands more in the middle of their product cycles, with further support from newer footwear categories that R é gis will touch on later. In apparel, organic sales grew by 5%, driven by our broad and energized proposition as we continue to enhance our assortment across athleisure, performance, and streetwear. We believe there's significant scope for growth in this category, particularly in North America, where our apparel mix is low compared to other regions.
Despite stronger organic sales growth in apparel, the category sales mix reflects the full-year sales from Hibbett and Courir, both of which are more footwear-centric than our other group fascias. Quickly touching on our smaller categories. In accessories, a lot of which is actually apparel, such as baseball caps and socks, organic sales are up 11%, driven by strong growth in our sporting goods businesses. Other, which includes outdoor living equipment and JD Gyms' memberships, maintained its share of 3% of our sales mix. Turning now to our geographic regions and starting with North America. While like-for-like sales were 1.8% lower, we saw an improved performance through the year, with a return to like-for-like growth in Q4, supported by disciplined execution against its trading plans and strong online sales growth.
Excluding the standalone Finish Line business, where we continue to make progress with the ongoing wind down, like-for-like sales were 1.2% up for the year. Operating margin was 250 basis points lower year on year, with the wind down of Finish Line a significant but short-term factor. Finish Line continued to invest in price within its online offer to maintain competitiveness, it was the primary source of promotionality amongst our fascias. The lower operating margin was also driven by continued investment to strengthen the long-term positioning of JD, which continues to grow brand awareness through the year. Finally, we had a full year of Hibbett in the numbers, which is a slightly lower margin business than our other key North American fascias, particularly following conversion to IFRS.
Integration work across Hibbett and our other fascias, including JD, progressed well in the year, supported by procurement, technology, and supply chain and logistics efficiencies. We're therefore on track to deliver annualized cost synergies of over $25 million across FY 2026 and FY 2027. Turning to Europe, the region delivered like-for-like sales of -1.2% ahead of the group, driven by good growth across our sporting goods businesses and a resilient performance at JD and supported by online sales growth. Europe's operating margin was up 20 basis points, benefiting from cross-efficiencies across retail, online, and supply chain operations, including the ramping up of automation at JD's Heerlen Distribution Center. This was partially offset by our controlled price investments, particularly in the online offer, which supported better traffic and conversion.
As a reminder, we expect over GBP 20 million of cost benefits across FY 2027 and FY 2028 as technology and supply chain double running costs unwind. Finally, in the U.K., we saw weaker sales against a tough consumer backdrop, particularly in the online channel. Organic sales, the more relevant sales KPI, given our ongoing transition to fewer, bigger, better stores, were down 2.5% for the year. The U.K. operating margin was 70 basis points lower year-on-year, largely due to operating cost and leverage impacts. Briefly touching on Asia Pacific, which delivered like-for-like sales growth of 0.4% and organic sales growth of 8.5%. Performance was supported by resilience in footwear and growth in apparel and online. Operating margin was 100 basis points lower as the business invested in infrastructure to support its store expansion program.
Taking a look now at the profit bridge on slide nine. Please note that for the purposes of underlying analysis, I have netted off the marketing contributions and gross margin against the corresponding marketing costs within OpEx, which is reflective of how we manage and report the business internally. Starting from the left-hand side, which rebases FY 2025 to account for translation FX. The underlying like-for-like gross margin reduction of 30 basis points was the equivalent of GBP 34 million. Our like-for-like sales performance at a constant gross margin contributed GBP 63 million. Note that that's net of GBP 49 million of attributable variable OpEx savings. The next bar shows like-for-like OpEx increases of GBP 85 million, primarily driven by inflation in our labor costs, including higher salaries and National Insurance rates, as well as technology investments.
Through our strong focus on cost management, we delivered GBP 45 million of structural OpEx savings through labor efficiencies, productivity initiatives, and operational synergies. Combining this with the GBP 49 million of variable OpEx savings, we were therefore able to fully offset like-for-like OpEx increases. Rolling through from H1, we had a non-cash mark to market charge of GBP 10 million. We expect most of this to unwind in FY 2027. The contribution from new stores and annualizations was GBP 43 million. Hibbett and Courir added GBP 66 million. Finally, we saw a GBP 20 million increase in the net finance expense, excluding lease interest. This was largely due to interest on the debt component of our acquisition financing. On this next slide, we set out our summary cash flows for the year. Starting with our statutory PBT of GBP 629 million.
Depreciation and amortization was GBP 966 million, up GBP 180 million year-on-year, reflecting the annualization of acquisitions and investment in our stores and supply chain. Lease repayments were GBP 508 million. As a result, the group's operating cash flow was a little over GBP 1.3 billion for the year, up 3.3%. This metric is essentially EBITDA under IAS 17 and represents a very resilient performance given the tough backdrop we are operating in. The change in working capital resulted in net outflow of GBP 248 million. This was due to an increase in inventory of GBP 55 million to support new stores and an outflow of GBP 193 million in net payables, reflecting the timing of payments and lease incentive receipts, which are essentially CapEx contributions from landlords.
Gross capital expenditure in the year was GBP 401 million, down 114 on the prior year, largely reflecting the completion of our supply chain investment phase, which saw associated CapEx 60% lower in FY 2026. Tax interest and other cash payments were GBP 198 million and includes about GBP 50 million of timing and phasing benefits. Taking all that into account, free cash flow was GBP 462 million, an improvement of GBP 123 million or 36% on last year, and represents a 35% conversion of EBITDA.
After dividends and share buybacks of a combined GBP 253 million, we saw an increase in net cash of GBP 259 million year on year, leading to a closing net cash position on the balance sheet of GBP 311 million. Turning to slide 11, we've done what we said we'd do. We managed our inventory and cash with focus and discipline, and we have maintained a strong balance sheet. Closing net inventory was flat year on year and 3% higher at constant FX rates, broadly in line with organic sales growth. This was a result of strong and disciplined management action in H2, and we've exited the year with a much cleaner book of inventory. We also continue to take a disciplined approach to CapEx with a strong focus on returns.
Gross CapEx for the year was GBP 401 million. That's equivalent to 3.2% of sales, significantly lower compared with the 4.5% of sales in the prior year. Our average return on store investment remains in line with our three-year payback hurdle. Finally, we are maintaining strong liquidity position with significant headroom, including IFRS 16 lease liabilities. Our net debt was just over GBP 2.8 billion. This represents net leverage of 1.4 x. Taking into account the Genesis buyout option in FY 2030 and FY 2031, our pro forma net leverage of 1.9 x remains within investment grade levels. For completeness, last year we completed a comprehensive debt refinancing and including undrawn RCFs, our total available liquidity at year-end was around GBP 1.8 billion.
Now I'll move on to our Q1 trading update and our outlook and guidance for the coming year. As a reminder, based on typical sales weightings, Q1 is our smallest quarter in the financial year, and as such, the timing of things such as key product launches can have a disproportionate impact. We maintained our commercial discipline in what continued to be a tough market backdrop. We delivered well around important customer and product moments, including Eid, Easter, the U.S. tax refund season, and key product launches, underscoring our ability to capture spend when it matters most. Organic sales were flat year-over-year, supported by net new space growth of 2.3%, while like-for-like sales declined by 2.3%.
Weather affected performance at the start of the quarter, with wet conditions in Southern Europe and the U.K. and a severe cold snap in the U.S. Trading strengthened through March with a solid performance over Eid, supported by our successful delivery of new product launches. Trading in April was volatile, particularly in Europe and the U.K. We saw a solid performance over Easter, but lower footfall throughout the remainder of the month, partly offset by stronger in-store conversion and online sales. Our gross margin for Q1 is in line with our expectations and the qualitative guidance for FY 2027, which I'll turn to in a moment. Let me now turn to our market outlook.
Consistent with the commentary in our Q4 trading update, we expect market growth to be muted in FY 2027, shaped by our weaker spending outlook for our core consumer demographic and ongoing product cycle evolution at some of our brand partners, particularly in footwear. Since January, we've obviously seen rapid evolution in the geopolitical and macroeconomic environment. While JD has no direct exposure to the Middle East, we continue to monitor the situation closely, including for potential secondary order impacts on pricing and consumer demand. On this slide, we've set out the conditions under which we could see a weaker or indeed a more, on the optimistic side, a stronger market growth outlook this year. We've also outlined where we believe annual market growth for FY 2027 is currently tracking in each of our regions.
Consistent with the last 18 months, we expect the U.S. customer and market to continue to be more resilient than in the U.K. and Europe, where we currently expect consumer sentiment to remain subdued. This view is subject to change as the year unfolds and will provide a further update at our H1 results in September. As much as that last slide was about the uncontrollables, this one's all about the controllables. That's what we're focused on. As you saw earlier, we were able to fully offset like-for-like cost increases in FY 2026. We are focused on driving structural efficiencies across the business. By way of some examples, in procurement, we reduced our delivery carrier contract costs by GBP 11 million across the U.K. and Europe, and our tech contract renegotiations unlocked $6 million of savings per annum in North America alone.
We also realized significant cash savings on lease renewals in the year, which appear in the P&L as lower depreciation under IFRS 16 accounting. Talking of accounting, I'm pleased, perhaps not our auditors, to see a significant reduction in the audit fee reflecting the progress we have made in the last couple of years and improving capability across our systems and functions in finance. Critically, there's also much more we can go off after in FY 2027. Last month, we began to roll out our new finance and HR systems in North America. We consolidate platforms, we unlock the potential for shared service capabilities, enabling further efficiencies. We will also continue to leverage our new scheduling tools to optimize store staff levels based on the customer activity and better drive productivity in our stores.
As we make further progress in modernizing our distribution centers, including through automation, we expect to realize further scale benefits and overhead efficiencies driving lower unit costs. We expect the continued rollout of self-checkout and RFID technology in stores to deliver meaningful customer and staff productivity benefits. While these are only a few examples, as we've demonstrated in FY 2026, we are aiming to significantly offset inflationary like-for-like OpEx increases in FY 2027 through these and other efficiency and productivity initiatives. Bringing this all together and moving to our guidance for the year. Firstly, we continue to anticipate market growth to be muted in the near term. Within our sales performance, we expect net new space growth to contribute 2%-3%. As in FY 2026, we will continue to implement controlled price investments to stay aligned with near-term customer and market dynamics.
We expect these to be weighted more towards the first half of the year. Given the rapid evolution in the geopolitical and macroeconomic environment over the last couple of months, we believe it's prudent to guide to a wider profit range than we were previously planning internally. We'll continue to closely monitor the situation in the Middle East and its potential impact on the consumer and our business if the crisis is prolonged. Overall, based on what we know today, we anticipate profit before tax and adjusting items to be within the range of GBP 750 million-GBP 850 million. Reflecting our strong cash generative model, we expect free cash flow in the range of GBP 460 million-GBP 520 million for the year, supported by disciplined CapEx and strong working capital management. Finally, slide 17.
In conjunction with our new three-year cash flow target announced today, we've also updated our capital allocation framework. With our major M&A and investment cycle complete, this update reflects the next phase of JD's journey and reinforces the balance between investment and growth alongside delivering strong cash flow and cash returns to shareholders. First, we will prioritize organic growth opportunities with attractive returns and keep an open mind on inorganic bolt-on opportunities that accelerate our strategy. We expect gross CapEx to settle at around 3%-3.5% of sales over the medium term. Second, we will maintain appropriate leverage headroom to meet future obligations, including the Genesis buyout option in FY 2030 and FY 2031. In line with our confidence in our medium-term trajectory, we're committed to delivering attractive cash returns to shareholders.
Building on the proposed 20% increase in our FY 2026 ordinary dividend, we will deliver progressive, sustainable dividend growth with the clear intention of reaching a more attractive yield over time. This will be supplemented by the return of surplus capital via a rolling share buyback program of GBP 200 million a year. This clear and simple framework is underpinned by the strength of our balance sheet and our cash generation. With my review concluded, let me hand back over to Régis for the business update. Thank you.
Oh. Great. Thank you. Thank you, Matt, for putting less loud music, so this time it was a little bit better. Thank you, Dominic. Let's move now to the business update. For the year ahead, we are focusing on five key strategic initiatives. First, our product range to offer the best and most relevant product to our customer. Second, our store productivity to offer the best service to our customer at the right cost. Third, our new e-commerce platform to offer the best online and omnichannel experience to our customer. Fourth, our AI adoption to drive growth and improve our operational effectiveness. Last but not least, our loyalty program to offer more personalization to our customer. I will now take you through each of these initiatives in detail, but before doing so, let's talk about the market and our customer trends.
First trend, more young people are adopting an active lifestyle with health and fitness as a priority. I was amazed to see so many young people when I joined a running club and the atmosphere. It is much more like a nightclub than a running club. We see the same trends in our gym business. More people, more and more young people looking not only for weightlifting, but for community social interaction. It's the same for HYROX, the same for Padel. People are prioritizing exercise, which is supporting our industry. Second, there is a clear trend for comfort in everyday wear, with more consumer planning to wear comfortable clothes and shoes, supporting the long-term growth of our industry. At the same times, more than 80% of consumer wear sneaker every day. It mean that the market is now maturing and is in a new phase.
No more double-digit growth driven by first-time adoption, but continued growth driven by newness and repeat buy. We see customer embracing and merging different trends, wearing athletic apparel for casual occasion or pairing athletic footwear with non-athletic apparel. Like you have seen our JD model, Dominic, wearing our product. Same, I was at the graduation of my daughter, and most of the boys were wearing suit with sneakers. We believe these are structural factors that will continue to create demands in a maturing market. The key for JD is being agile, to identify trends, and to partner with the brand to provide newness to the consumer to drive the market growth. Talking about agility and trends, let's turn to a very familiar slide which demonstrate the power of our sports fashion model and our agility in navigating trends.
Looking at footwear, the way we build our range is by category. We take running, performance and retro, basketball, football with the terrace, tennis with classics, skate, and other. You can see the movement between the category. For example, running has grown significantly over the past two years and moved back above the 50% mark, where it was in 2020, supported by the development of performance running. Thanks to our agility, to our flexible merchandising, to our buying excellence, we are navigating, anticipating the product cycle, the change of trend, and the evolution of brand heat. This is critical in the context of the evolving brand and product cycle. Turning to apparel, you can see how we have moved our offer toward performance apparel and street fashion.
It show again our agility to capture and create growth by extending our reach with performance wear, where we have delivered more than five times growth over the last five years. Same for the street fashion that show our ability to extend to new category to respond to customer trends, including through the development of our own brand. Apparel strategy is key as it create a competitive advantage in every market we operate. It brings to life our unique lifestyle proposition. Coming to our key five priority, the first one. Coming to our five key strategic initiatives, the first one is to diversify our proposition to deliver the latest and greatest product for our customer. The JD customer, the young customer, the 16, 24 years old customer, they are in sport, music, fashion, culture.
Through the eyes and ears of our industry-leading buyers and merchandiser and thousand of young store colleague across the globe, we know our customer incredibly well. This, combined with our strong brand relationship, allow us to feed in and exchange insight to create the best possible assortment and bring it to life in the theater of our store. We also work with our brand partner to create our powerful exclusive product set, which we supplement with our own brand. Those own brand allow us to bring new product to market faster at attractive price point. Our exclusive and own brand product make us 50% of our apparel sales and 30% of our footwear sales. We are leveraging those key strengths to diversify into more trends, more style, and more category. Here are some example.
If you take fashion, you will see here brands like Timberland, Birkenstock, UGG, Havaianas. For all those brands, we are the number 1 wholesaler account for them. Trends like denim, knitwear, and quarter zip. If you take performance, this is where we have Nike Vomero, Adidas Evo, HOKA, On, ASICS, and brands we help bring to market, like Montirex was nothing, created by two guys in Liverpool and now been in all our stores, and AYBL the same for women. If you take street, this is where we have Air Max 95. You may have seen the Liu Tao campaign. Adidas Superstar, New Balance 9060, brands like Hoodrich, Von Dutch, which are exclusive to us, and our own brand, Supply & Demand and Unlike Humans. If you take outdoor with The North Face, Arc'teryx, we are the only mass market retailer having Arc'teryx, Salomon, Rab, and Columbia.
The exclusive, all those product are exclusive to us. We develop exclusive product, delivering more style, more technical feature, more colorway. We are open to business, so if you like any of this product, I recommend you to go to one of our store today. They are open, and the JD team is today modeling some of them today for you. To summarize, we are bringing more brands, more style, and more trends in performance, athletic, leisure, and streetwear. There is no limit to what we can offer to our customer. We are widening our product range to ensure we are the number one choice for them. To give a concrete example, our team identified nine months ago the boots been a trend for the young customer. We have worked with Timberland to rejuvenate the Yellow Boots and create exclusive product.
Now, we are working to bring back from Nike archive a boot. We have tested trends in size? and Footpatrol. We sold out very quickly, and we are now working for JD to produce a product for the second half of the year. This is the way we create and scale new product for the market. Another focus is to elevate woman range across footwear and apparel, to bring more appeal for the female customer, where JD has a low market share. To do this, we are leveraging core insight. We are increasing our apparel penetration in North America and Europe, where we see a significant opportunity from the current level. We are working with our brand partner to enhance our product storytelling to better engage with our customer.
We did recently, through the campaign "We Run This City" focus on performance running. You know our customer is the epic runner, not the sweaty runner. Today, we are accessing all product activity of our major brand partner. Performance, lifestyle, we access all. It is for us to create this offer to deliver the best for our customer. Second key strategic initiative is driving store productivity and optimization of our store estate. Our net store movement last year was a reduction of 39 stores, demonstrating a fewer, bigger, and better store strategy. First, optimizing. In North America, we will leverage group best practice to optimize Hibbett store footprint and profitability. As part of this, we will close around 170 underperforming Hibbett store over the next three years. In Europe, we are focusing on our key market.
We will therefore restructure our operation in Eastern Europe and in Germany. In U.K., we are streamlining our outdoor business with less fascia and a better online business following the successful implementation of Shopify. All this action will ensure our investment are concentrate where we can scale. When we have scale, productivity and return are strongest. Second, converting. This year, we are converting City Gear store to DTLR and Shoe Palace, following last year very successful trials and accelerating the conversion of our standalone Finish Line store to JD. Both conversion program have so far delivered strong uplift in sales and great return on investment. Third, fewer, bigger, and better store to serve our customer better and to be more productive. In JD U.K. last year, we saw a net reduction of 24 store, but a 4% increase in overall selling spreads.
Let's bring it to life with this short video.
[Presentation]
I'm pleased to say that Trafford, which is a store that you have seen, is today the biggest multi-brand sports fashion store in the world by sales. Not by size, but by sales. A big well done to the team. The third key strategic priority is completing our global e-commerce re-platforming. This has been my biggest frustration in the last three years. Our e-commerce platform built in-house was not fit for purpose with major deficiency. The priority has been to secure by investing in cybersecurity and putting in place the IT general control foundations that didn't exist in the business. Meanwhile, we have invest in cloud-based technology with a best of breed strategy and upgrade our legacy system. With now solid foundation and the right team in place led by Jiten, we make significant progress.
Last year, we roll out our new online platform in North America, Southeast Asia, and Italy, allowing us to expand ship-from-store and click-and-collect capability. We are very pleased with the result. We have seen a double-digit percentage increase in online sales. Building on this momentum, this year we will continue to roll out our new online platform. We have done Ireland last week. We will do U.K. in the coming months and in Europe to complete our re-platforming project. Thanks to the composable architecture of the new technology, we are now able to build and release new technology product and feature much faster, enabling us to move forward with marketplace, which we don't have, loyalty, consumer was not able to get redeem point on our loyalty scheme, AI, and payment offering.
Fourth, we are accelerating AI adoption with a dual focus on driving growth and improving our operational effectiveness with a test-and-learn mentality and a decentralized and organic approach. We believe there is a huge opportunity to drive growth through better merchandising decisions, the right product at the right place, more personalization, and helping our customer find the right product, for example, through agentic LLMs, chatbot shopping assistant, or sizing prompt on our website. At the same time, we are improving our operation through better inventory management, scale marketing content. We can duplicate our marketing content in an infinite way, improve customer care, and central efficiency. While still in the infancy stage, we have seen some strong early result. Let me give you a couple of case study to demonstrate our focus. First, JD has completed a three months trial of the AI chatbot shopping assistant, Ask JD, in the U.K.
The chatbot tailors our customer shopping experience and helps them find the product they want faster. Customers are able to ask the assistant for suggestions on latest trends, details regarding specific product, and creating head-to-toe looks. Early results have been promising with over 300,000 customer interactions and conversion increased by up to five times. We will continue to test and learn and iterate with new features. Ask JD will also be launched in the U.S. soon. Under the operational effectiveness pillar, JD has implemented AI-driven customer care chat and voice tool, enabling faster 24/7 support for JD customers. All customer service calls now start a journey with a voice AI, with 40% handled entirely by the agent. This is allowing our customer service colleagues to focus on more complex issues while reducing the cost per service by around 30%.
As you know from our announcement earlier this year, we are a first mover on agentic e-commerce, which is highly relevant for the JD customer. As you watch the following demonstration, you will notice the customer experience is not fully end-to-end, and that's deliberate. What this demo should highlight is the earlier part of the customer journey, discoverability. Now it's highlighted. Despite the prompt being about a product, not a retailer, JD consistently mentioned it, both in the narrative response and in the product recommendation generated by ChatGPT. Let me be clear on a few points. First, not everything you're seeing is unique to JD. The in-browser purchasing experience you see here is an OpenAI capability that can be enabled across many website today.
However, our ranking, our visibility, and the frequency with which JD appears over competitor is very much a direct outcome of the advancement we have made in generating engine optimization over recent months. Second, the more optimized brand experience you see, the demo particularly across the first group of brand, are a direct result of the re-platforming work we have prioritized over the last year. We have now the foundation, and the foundation will now pay off. This is just the beginning. Our partnership with commercetools will unveil instant checkout, which we expect to go live soon in the U.S. Taken together, this is how we move from discovery to consideration to conversion, not just keeping pace with our customer shop, but shaping how they will shop in the future. Our fifth and final strategy initiative is taking loyalty and data-driven personalization to the next level.
In the year, we continue to scale our established global loyalty program, JD STATUS. The program now has almost 10 million active members globally who generate between 33%-40% of sales across our region. In the U.K., the Retail Loyalty Index ranked JD STATUS within the top 10 of loyalty program in the all retail sector. One of the key distinctive feature of our proposition is JD Cash, which customer earn on each of their purchase. We see very strong return on this with over seven pounds spent at JD for every GBP 1 of JD Cash. This year, we will focus on leveraging the data lake it provide us with personalization through targeted offer, a personalized access to new product release, gamification, and competition. This drive a virtual circle.
The more we personalize, the more engage our customer, the more data we have, the more we can personalize, and so on. The output of our strategy initiative is to drive a better customer proposition, so better sales, a better productivity of our space and people, and so better profitability. In North America, we will continue to focus on growing brand awareness of our JD fascia through store opening and conversion, backed by a targeted marketing. We are continuing to increase our apparel penetration. Meanwhile, we are leveraging the Hibbett acquisition to reduce our support function cost. Altogether, we see a clear opportunity for North America margin to move higher in the medium term. In Europe, as you saw earlier, we have refined our market focus. We are taking appropriate action on the store footprint.
As we scale automation, our LNDC will drive lower cost per unit and unlock savings on duties as we continue to move away from replenishment via the U.K. Building on the success we have seen elsewhere, we will roll out our new online platform across Europe this year. With this support from this action and natural operating leverage, there is a significant opportunity for the European margin to move higher over the medium term. Finally, in the U.K., our focus is to be more productive with our space and to optimize our central overheads. We will also implement our new online platform later this year to regain online market share, and we are focused on deepening our customer relationship through loyalty and personalization. Over the medium term, we expect the U.K. operating margin to remain stable at the current level. This bring me to our group medium-term financial priority.
Put simply, we intend to grow sales ahead of our market, driven by organic sales growth with a contribution from net new space of 2-3 percent point. Deliver operating margin progression driven by Europe and North America as I outlined. This will be supported by our cost efficiency program as well as cost leverage. Finally, generate strong cash flow and attractive shareholder return. Within this, our gross CapEx will stabilize around 3%-3.5% of our total sales per annum, with disciplined working capital management, which will support our new cumulative three years free cash flow target of over GBP 1.4 billion on three years. To conclude, our customer-first approach, combined with tight cost and capital control, deliver a resilient performance for JD against what was a tough trading environment.
Our economic model is generating significant free cash flow, and we expect to deliver attractive shareholder return through increased dividend and share buyback. To finish, our FY 2027 guidance is centered on controlling the controllable. We are focusing on maintaining our cost and cash discipline while building a global customer-focused business with the right infrastructure and governance. Before I hand over for our Q&A session, I'd like to thank all my colleagues for their hard work and dedication. Their commitment and their agility are moving us forward, Forever Forward. Thank you. Marsh, over to you.
Thank you very much. All right.
No loud music, please.
No loud music to protect my delicate ears. We're gonna go to questions now. We're gonna go alternate between left and right. State your name and institution. Dom, could we go with Richard on the front row, please?
Thank you very much. Morning. Excuse me. Richard Chamberlain from RBC. I've got two questions to kick us off, if that's all right. One on apparel, one on Finish Line. Apparel, I think last year the organic sales were up about 5%, but the weighting moved down slightly. I just wondered if you could talk about how you see that weighting moving going forward by geography. I think at the moment it's around half. Is that right in the U.K.? I guess probably under-penetrated outside the U.K. That's the first one. Finish Line, I wondered if you can just give a bit more color on how you see that store portfolio evolving over the next sort of three years or so.
I think you're talking about 80-90 conversions in the coming year, what are the sort of plans for the rest of the estate? Thank you.
Apparel, you're right, did well, + 5%. The weighting is diluted by the acquisition of Courir, where there is no apparel. That's the reason. If you take the like-for-like weighting is going up. It's just a matter of the acquisition of Courir, where apparel is a very significant part of that. That's. We are really happy with the performance in apparel and continue to do well. I think footwear is where it is more challenging.
Just on the geography point, in the U.K., actually more than 50% is apparel. I think that shows the diversity of our business. In Europe it varies depending on the fascia, but broadly around 30%. Some higher, some lower, such as Courir, for example. North America it's less than 20%. I think that's where there's a real opportunity. As Régis said, Courir clearly has a lower, is more footwear focused. Hibbett is also more footwear focused. I think that's also taken it back a little bit in the U.S. With those now in the base, the opportunity to grow the penetration across the board is absolutely there.
On a like-for-like we continue to increase penetration.
Thank you.
On Finish Line, as you know, Finish Line, we finished the year with 170 stores. There are, you know, what we are doing is that we are co-continue to convert. In three years' time there should be no Finish Line stores. We will keep the Macy's business, which is under the Finish Line banner, but we will have no more Finish Line store. It's just the time to do the right things in terms of conversion. Most of the conversion now is with an extension or better location in the mall. It depends on that. And the other part is that we have some, I would say in, you know, in U.S. you have some malls that are really dying, but we do a good business.
That's why the like-for-like is down. For the moment, all those stores are profitable. We will close them when they start to be a problem. That's why we are taking our time. That's why I think we should focus the like-for-like on excluding the Finish Line store, which are, you know, by definition going down. As a matter of time, is there will be no more Finish Line stores. In two years' time, there we should not no more have a Finish Line standalone store.
Thank you.
Anne, please, in the second row.
Thanks. It's Anne Critchlow from Berenberg. I've got three questions, please. First, if you could give us an idea of the number of net closures overall for the year. Second, I'm just wondering if there's some tension between your aims to invest in the stores but also the free cash flow target. You know, are parts of the business pushing you to spend more perhaps? Thirdly, on Marketplace, are you working with a partner there? Thank you.
Okay, Dominic, you do the first one, I will do this, the two other?
Yes. In terms of, you talking about last year or the year to come?
The year to come.
Year to come. In terms of last year, you saw we closed 39 stores overall. It's probably easier just to give a view by geography. In terms of our move in the U.K., we expect to see around probably around 20 stores closed in the U.K. in the coming year. As we said for last year, space-wise, we'll probably stay at least the same or increase as we move that. We will see the beginning of the closure of the stores in North America with Hibbett. 175 stores probably over around three years, so if you assume an average spread over a period of time.
If we then go to expansions in North America, around 20 new JD stores and probably 70-80 Finish Line to JD conversions. That will give you a flavor of the mix in North America. In Europe, probably around even by the time we think about what we're doing around JD plus closures in Germany and Eastern Europe, probably a net negative overall. I won't give you a precise number because sometimes as you work through the plans, the timing may be a bit different. Say broadly flat for the year.
Concerning your question on free cash flow, no, there is no tension. I think we have increased a lot investment, and that's, you know, the reason why profit is down, net, EBITDA is up, is because of the investment we have made, especially with IFRS. You get, you know, the first part of your investment very penalize a lot your profit. I think that I always learn from my finance background is that cash is king, and you see our level of cash, it means that the business is doing well. I think that this investment we have done are the right investment. The business was under-invest, so, mostly in term of infrastructure, but even in store in the U.K. in term of, you know, where we have a older, store fleet, we didn't invest.
We are able to deliver this free cash flow without putting any constraint on the opening, because today we want to keep our discipline, which has been always the same, and which is a two years payback. Today in a market which is muted, you know, there is not a lot of opportunity to open a lot of stores. We are adapt to that. There is really, it come, you know, and Dominic will say we always have a CapEx budget which is higher than what we finish by spending because we don't find the enough opportunity to invest, which is a great problem to have. No constraint in term of investing in the business. I would like everyone to really understand these key numbers.
If you take compared to 2022, our profit is down GBP 100 million. Our EBITDA old fashion is up GBP 200 million. It show really the quality of what we are work and the investment we have made in this business. I think we should be judged on this one because that shows the underlying strengths of the business. On your question around marketplace, our technology didn't offer us the ability to do that. We are late. The new technology we have implement, commercetools, will help us to be able to do marketplace. For the moment, we have a partnership with Mirakl around that, but that can be flexible. Definitely, we were You know, this is my biggest frustration for the last two years.
Every time I was asking for something, "Oh, the platform cannot do that. Oh, the platform" That's why we had spent a lot of time. We have lost ground, and I think that in U.K. we have lost market share online because our platform was not You know, in the past, we move our digital business easily because we were the only one to access product. Now, the access of product is less a scale market in terms of ability to access product, the quality of the website makes a big difference. Our website is not good. We need to say it. It will change. In July, we are implementing the new platform, we will be start to reinvest in our proposition online around marketplace.
Even, you know, our loyalty program, you cannot redeem your points, your JD Cash on the e-com. There's plenty of limitation we have today on, omnichannel that will be slowly but surely out, and we can now really do a better, much better job and catch up on our online business.
Okay, let's move over to this side. Can we go to Kate, please, on the third row?
Thanks very much. Morning, everyone. Kate Calvert from Investec. First question is just on the group gross margin. You made a comment about higher marketing contributions as a percentage of sales, adding, I think about 0.3 percentage points of sales. Is this due to a more supportive Nike, and how sustainable are those higher marketing contributions? My second question is just on the guidance for FY 2027. You're guiding effectively for another year of profit decline. Can you give some more detail on your expectations by regions in terms of what's up, what's down? My final question is just on Finish Line x Macy's. Is that unprofitable? If so, how much of a drag is it on the U.S.? Thank you. Or North America, should I say.
I would take the first one and second. Dominic will complement the first one and the second one. I start with the last one. The Macy's business is a very profitable business for us. It's a very good business. That's why we will continue. It's a different customer target, more female, a little bit older customer, and we are targeting a different offer. That's a great business that we have there.
I'm part of Macy's.
No. It is what my answer is on Finish Line and Macy's.
Okay.
So it-
Okay, cool.
This business is a very profitable business and a very good business. It's under the name of Finish Line. You have a Finish Line standalone store, which is a different business, which was my first answer. That's the two, the difference between the two. Gross margin, it reflect more support from all brands, so it's not Nike related. It's all brands.
I think that in a world where, you know, you need to create demand, you need to connect with the consumer, brands are investing more, and they are investing with us because they see, and this is really interesting, you have seen the success of the Molly-Mae partnership with adidas, is the brand understand now more and more that the go-to-market strategy should be more exclusive, more with a key partner, and we are getting more of that, where we launch product together, we get marketing support to do that together. It's not a relation to Nike. It's a relation with all the brand.
Yeah. Just on that point, it's neutral to the bottom line because effectively it's compensating us for costs that we spend. What you're seeing here is just a disaggregation, a grossing up between OpEx and gross margin. In the past, we'll have had this. It's just that it's the way it's worked through in the year, it will vary a little bit from year to year. I think the thing to focus on gross margin is the 30 basis points price investment that we've made as being the real underlying trend of what's happening with gross margin. In terms of the profit guidance for the year, the overall group profit margin will go down, obviously, as you say, because we're expecting to see profit go down during the year.
When you look at where the market is, as we explained on the slide, we expect North America to be more resilient. Therefore, I would expect less pressure in North America, particularly as we start to see some of the benefits of the synergies coming through. We've made good progress on those, and there's more to go to. I think we'll see more pressure in the short term in the U.K., just because of the market pressures that we're seeing there. In Europe, we'll have pressure because the market is challenging, as we said in the slide. The actions we're taking around Heerlen and around the store portfolio, around the commerce platforms going in and leverage should start to help offset that a little bit.
That will give you a little bit of the dynamics of what we're seeing in the, in the various key markets.
Thank you.
Okay, we'll move to the next question. Nothing on this side. We'll go to Clive, please, on the third row.
Thank you. Clive Black from Shore Capital, who feels very old wearing a tie, I have to say. My mental health has been stressed as a Coventry City supporter seeing Aston Villa in your video. Two questions. First of all, Régis, you've talked about youth unemployment in the past and been worried about it. How do you see trends across your geographies in that 16-24 age group? On your guidance, what are you assuming to deliver GBP 750 this year? What are the factors that would take you to the lower end of that range across the group, please? Thank you.
Okay. I will take the first one, Dominic will take the second one. What we've seen is that as you know the numbers better than I do. I think long term, the good news is that the demography will help because long term, we should see unemployment going down because of, you know, the evolution of the population. Short term, especially in U.K., you know, the increase of the NI has been really a key factor in retailer investing in technology to replace people. You know, all the 10, 20 hours checkout, you know. Now you go to M&S, you cannot find someone at the till. Even the large till are now self-checkout.
That has been, and you have seen that in the last 12, 18 months, a big development of self-checkout, which is, you know, our customer was doing, you know, 20 hours, 100, 20 hours, in that shop. We see the unemployment for youth going up a lot in U.K., which is very interesting. We get data from Circana, which is market data. If you take the sneaker market, the sneaker market is flat, and the part which is reducing is the 14, 18 years old, which is exactly those customers that will have a 10 hours contract. With this contract, they were able to buy a pair of sneaker that the parents didn't want to pay because it was seen as a something, and they don't have any more.
That's why it's putting, you know, I think pressure, especially in U.K. In Europe, a little bit less because as you know, Europe is a much more protected on all those things, but we see a little bit the same and less so in the U.S. So that's where we see. So that's really for me, as you mentioned, is a key KPI I'm looking at because that's the one that makes a difference for us, is unemployment, because the first ones that lose their job or don't get the 10, 20 hours contract is a youth customer. We see that's why the way we have guided, which is to come to your point and to do the introduction to Dominic, is that we see U.K. as the worst because of the unemployment of the youth.
Europe being a little bit the same. The other thing that happened in Europe and U.K. is that the consumer is half empty, whereas the U.S. customer is the most resilient. They always are full, and unemployment is in better shape. That's really what we're seeing.
On the guidance point, in setting the guidance, we've really evolved from what we said at the trading statement in January. We didn't give formal guidance then, but we talked about muted market growth. Over the medium term, we see this as a 2%-3% market growth sector. Muted is probably more like 0%-1% growth. We'd expect to slightly outperform that 2%-3% space growth would then point to negative like-for-like, and that's where the market is at the moment, and I think no surprise in the current environment. There are other puts and takes in terms of new space and, you know, significantly offsetting OpEx inflation, and we do expect to see some pressure on margin continuing at the same level.
Going to the bottom end of the 70-50, what would need to be the case? I think probably most likely at the sales line, so an assumption around where that like-for-like would sit in the period. At the bottom end, we're probably in an environment where there's probably a bit more promotion on in the market because people are struggling a bit more and possibly some more inflation. Difficult to be precise, but I think it's just us being pragmatic. As we were in November coming to the peak season to say, this is an uncertain period, so let's just give ourselves some more headroom, and I think probably a de-risk on a like-for-like is the most likely way to get there.
Okay. Thank you.
Over to JP and then Warwick, please.
Thanks, Jonathan Pritchard at Peel Hunt. Just on apparel, I think the received wisdom over the years has been that apparel runs a higher margin, gross margin than footwear. Is that still the case? Is it hundreds of basis points? Is it tens of basis points or are they pretty much the same now? Just to build on Anne's question, the other side of it, really, the U.K. real estate market, is there the availability of sites? I mean, obviously, not as big as Trafford, commonly, but is there a pipeline, a strong pipeline of space to get to that, bigger and better, mantra? Just interested in that, Dominic, what you were saying on the sales bridge about the like-for-like definition. Could you just give us a bit more color on that?
Apparel, you know, intake margin on apparel is higher than footwear. Exit margin is the same. There's never been a big difference. It vary by season and all that stuff because it depend on. It's to make it simple, it's the same. I think that, and it has been the same for the last three years, there's no big difference between the two. In term of U.K., you know, we have Trafford, we have Bluewater. There is, you know, still some stores that we want to expand and to create this theater. That is around, I would say, five project per year in the coming three years. That's type of magnitude. And on the like-for-like?
I pulled it out simply because people benchmark us against others, particularly in our sector. Our like-for-like definition follows the majority of what retailers do, which is that our like-for-like is our core estate.
European retailers
European retail. Most retailers. Our like-for-like is our core estate and where we have new stores, where we extend by more than 10%, where we relocate in a market. We treat all of that as new space. And as you saw in the results, 2.1% organic, 4.2% new space, giving you -2%, 2.1% like-for-like. Some of our competitors, our very largest competitor in North America, treats effectively relocation and expansion as like-for-like investment in their existing store estate. If we applied those numbers to our measures, we'd be -0.6% like-for-like for last year. It's just giving you a comparison that when you look at different businesses, they use different measures and therefore direct comparison isn't always giving you the answer that you might expect.
To give you, and that's why we insist on U.K. for especially because to give you a concrete example, if you take Trafford is driving, is not in our like-for-like, but the impact that we have around the store, around the store because, you know, we drive so much sales are in our like-for-like. In a certain way, opening bigger store is driving a negative like-for-like, which, you know. Whereas if you take one of our competitor, he will put everything in the like-for-like. That's where, you know, it's a very different way of measuring. The same in U.S., some of the conversion is not in the like-for-like. When we do extension, which in their case it will be. The more practical example is Trafford.
Trafford has a very negative impact on our like-for-like, whereas it's a big success.
Okay. Just before we go to Warwick, if anyone's got any questions on technology and AI, Jiten's ready for you. He's hungry.
Ready.
Let's go to Warwick, please.
Been waiting.
Ask AI.
Morning. Warwick Okines from BNP Paribas. Sorry, Jiten, it's not on tech. I've got two. You said that the apparel mix is a bit less than 20% in North America. Could you specifically say what it is for the JD banner and how much it increased last year, please? Secondly, the most buoyant footwear category it seems is performance running for you. Is there enough innovation in the pipeline for that to keep that the strongest segment in footwear?
On the first point, it's just above 20% actually for JD, and it's grown by probably about 2 percentage points in the last year. We're seeing steady growth there. This takes time to build, so it's not going to be a sudden change.
Don't forget in U.S., you have a lot of the in the South, you don't have. You know, it will never be the U.K. one, because in U.K., you sell jacket, which is a much higher price point that you don't sell in half of the U.S. You sell only shorts and T-shirts. There is a price difference.
A good example of that is JD Canada is about 30% apparel penetration because of the price point of the jacket areas then.
On running, I think the biggest growth is not performance. In fact, it's retro running. It's not, you know, performance running play a role, but it's not significant compared to the growth that we are experimenting in retro running. It's not linked to the performance running so much.
Charles, please.
Thanks. Charles Allen from Bloomberg Intelligence. I think sort of just looking at the numbers you've given with space growth and negative like for likes, one has to assume that your sales densities are down a little bit, and you did talk about de-leveraging. I mean, is that right? Do you need to start getting your sales densities up to start getting the margin effect that you're talking about?
Sales density is going down a little bit, you know, because we are closing some small store, which are, you know, with a high sales density, but not very profitable because of the productivity. You have the two elements. It's the sales density and the productivity. The problem of our small store is that, you know, you need someone to open, you need someone to close. When sales is going down a little bit, you have no leverage, whereas with a larger store, you have leverage because you can invest in technology and all that stuff. Yes, you're right in term of sales density, but in term of staff density or It's going up.
The staff, you mean?
The-
Sorry.
The productivity in store.
Sales per employee is going up.
Yes. Yes. Yeah.
Yeah.
That's the balance.
Can I just check, are there any?
When you get larger store, your cost per square meter is lower than you have small store. You get that.
Just double-check. Are there any questions on the telephone lines at this point? No? Okay. I think we've got a few more on this side.
Morning. Jean Roche from Schroders. Can I have three? Sorry. One is on trends in shrinkage across the three main regions. The Vinted effect, I was being told that this was having no effect about a year ago. I do feel that must have ramped up now, and if you're able to measure it. Yes, I will ask one on technology and AI. How close are you to having shoppers directly being linked into your websites by the likes of Claude or GPT, or is that still not happening?
The last one, I take the two other.
Shall I do shrinkage?
Oh, sure. Yeah, sure.
Shrinkage. I mean, the JD shrinkage as a group is incredibly good, less than half of 1%, and that does reflect an average. It's better in some markets than others, but in all markets, less than 1%. We've seen it's steady in U.K., Europe, and actually improving in North America, which is, I think, a testament to the methods that we use to protect our stores.
Shall I take the tech piece?
Yeah. Yeah, we can finish.
In terms of shoppers being linked into the app itself or into our commerce, what you saw today in the demo was essentially a web view. It takes you to our product page in that respect, and then that commerce journey actually is mapped back into our commerce channel. In terms of customers linking into the app, our Hibbett fascia has actually gone live with a Hibbett store within the ChatGPT app. That's a test that we're running at the moment as a first fascia within the group. We've been live for one month, so early days, and we'll see how that plays out in the coming weeks.
Vinted, I think that is definitely happening on apparel. On footwear, the penetration is very, very low because unfortunately or fortunately, the young customer, when they wear a sneaker for a significant period of time, the smells stay. I'm sure if you have a teenager, you will understand what I'm saying by that. So it's a it's not it's really very minimum what they do on the sneaker side. On apparel, it's more important, but most of that is to buy new products. They just renew the product cycle. Our apparel sales are up, so definitely we don't see an impact. I think on sneaker, we are protected by the smell.
Fair enough.
Thierry, please. Thank you very much.
Yes, thank you. Thierry Cota from Bank of America. three questions, please. You haven't mentioned the World Cup. I was wondering whether you could measure the impact, you know, to be on a net basis, excluding cannibalization, if that's possible, and by region, Europe versus the U.S. Secondly, on Finish Line, it seems that when you give the numbers of like for like with the effect of Finish Line conversion, without it, the gap has been shrinking. I was wondering if you could elaborate on the number of stores and how much exactly is left to do, and if it's basically a function of fewer stores being converted or less efficiency in doing so. A very small question. U.S. tariffs, you're paying some tariffs for the products which are under your banner into the U.S.
How much you pay last year? With the tariffs being halved, is that going to be a few million saved starting in the latter part of the year? Thank you.
Okay. World Cup, I think what we measure in World Cup is replica, which is, which is tiny on the total sales. There is no That's a direct impact. There is a, there is a positive impact about talking about sport, about the soccer or the football culture in the U.S., which is a more midterm, long term. You know, I know you like numbers, but there is no You know, you cannot capture a number linked to The only numbers we can capture is replica, and replica is what? A GBP 30 million business.
About that, yes, yeah.
It's at the size of the group, it's very marginal. You have a positive impact about, you know, we were born in Manchester and Liverpool, North of U.K., based on the football culture. That what we have exported across Europe, and that what we have exported the U.S. The U.S. is more basketball culture. Football culture is less. The fact that football culture become more important in U.S. will have a positive impact because that's a culture that we know very well, that we are able to leverage. That is a midterm. There is no direct impact. We don't sell boots, football boots, or very marginally in U.K., so there is no direct impact.
Don't forget, we are a sport fashion retailer, we are not a sport retailer, so there is no direct impact.
The jersey.
Yeah, that's GBP 30 million. You know, it's GBP 30 million. Yeah. We do GBP 13 billion. If you want to go in micro detail, we can go, but I don't think it's not significant.
I'll do the Finish Line piece.
Yeah, Finish Line.
Finish Line. I mean, the reason it is representing a smaller proportion of the difference is because it is becoming a smaller estate.
Small stores, yes.
So-
It's becoming-
At the beginning of FY 2026, we had about 260 Finish Line stores. Last year, we closed 14, transferred 69 to JD. We finished this year with 175. We'll probably transfer around 80-90 this year. We expect to finish around 80-90 stores at the end of this financial year. As Régis said earlier on, really we won't talk about it then because they are less than 4% of our 2,500 stores in North America. We will be opportunistic about when we close them because some of them are still making contribution. We'll close them when it makes economic sense to do so. The reason is just it's getting a smaller proportion of the total store base in North America.
Thank you.
On the U.S. tariff, as we said last year, we have no direct impact of the U.S. tariff, or very limited. We mentioned last year GBP 8 million. That's the type of magnitude. It was mainly around our CapEx because it's a fixture and fittings that we are buying. As you know, we are buying our product from the brand, and the brand is covering the tariff or getting the benefit, so it's more a question for adidas and Nikes than for us.
Over to Caroline.
Good morning, Caroline Gulliver from Equity Development. Just to build on Jean's question, could you just talk a little bit more about the latest trends you're seeing by region in sort of the customer journey online for your young customers, obviously those 16 to 24-year-olds. , with regards to social media marketing, then how you're linking kind of TikTok and the app and the ChatGPT and all the rest of it for us oldies in the room?
Perfect. Do you want me to take that?
Yes.
Perfect. Okay, great.
You are the youngest. Please.
I'll cite some of the demonstrations you've seen today, hopefully answer that question. Ask JD was, is a great example. Really, it's driven a chat, an AI experience where the customer can really probe and enhance that customer journey through the life cycle of the digital ecosystem. We started off in a very measured test and learn approach. We actually just injected that product feature in the product listing page first. What we saw was low uptake, and driving only a 1% conversion on that page onto the next kind of size of the customer journey. When we moved that to the product display page, we saw, with the 300,000 sort of customers that Régis mentioned in the sample size, we saw high uptake, a 5X conversion into the basket.
What we're seeing is, with the micro moments of the customer journey, we are infusing AI where it makes sense. Really, we're taking a customer-led approach, very much a measurement-led approach, to make sure it makes sense. This isn't really about injecting AI everywhere. It's about making sure it adds value to the experience, and that also it converts and it makes economic sense. On TikTok, I think you mentioned, early stages, of kind of looking at that channel. Obviously, that channel has, is a different economic model. It has a different need state, but it's also where our customer lives, and we engage, highly with the customer on that social media channel.
At the moment, we're exploring with partners, the opportunity to transact, what that means in terms of the proposition we serve there, and the price point and the experience. I think that's the two questions. Was there one more, or does that kinda answer the question?
Yeah.
One more for Kate, I think. Dom, if you could pass the mic to Kate.
Thank you.
Thanks. I'll come back with another techie question as well, 'cause I had a bit of a shocking experience, two weeks ago. You're due to complete your global e-com update in the U.K. and Europe this year. How quickly will the shopping experience actually change for the consumer? Because obviously the systems aren't very joined up at the moment. Will you sort of be able to get next day click and collect? For example, are we going to have your loyalty program on the same app as your JD app, etc. ? What will the experience for the consumer be overnight sort of thing?
Yeah, perfect. I think there's multiple strands in that question, so I'll kind of answer piece by piece. I think the first thing is when we talk about the website, yes, it is a new website, but there is a whole raft of change that we're doing underneath that. It's a composable architecture. What do we mean by that?
Just, first the website in U.K. will be changed in July, August.
Yeah
Yeah.
It will change, it will change in July in that respect, but it's powered with a new search and merchandising platform. It's powered with a new content platform. It's powered with a new order management system in that respect. In terms of the customer experience, what it does unlock is more of an omnichannel offering. It allows the ability to drive the customer promise of click and collect further up the funnel in that respect, so you can start seeing availability of stock in the product listing pages. You have the options to do click, same day, pickup or click and collect, as you mentioned. It will have loyalty injected in it, so you can start to burn and earn online.
There's new sort of product list, product features that we wanna deploy as part of that launch. It's more fewer clicks to basket. It's better site speed. It's more scalable in that respect. You'll see more features being launched. This is not about replacing one platform for another and driving parity. It is elevating that experience. Okay.
You're right, it's not great today.
On the app, it's similar as well. I think you mentioned the app. App will also be elevated with a new app. It goes in, coincides with every market launch that we do. We launched Italy and Ireland, we upgrade the app capability with new features. You'll see the same play out in the app experience in the U.K. in the summer.
Okay. I think with our, that's with our Q&A concluded. I think we can thank you all very much for joining us today. Thanks very much to the JD management team. See you soon.