Well, good morning, everyone, and welcome to our annual results. A little later this year than usual, but good to see the numbers are in line that we have been delivering growth despite some very tough comps last year when the business was absolutely flying. And I think it is worth reminding ourselves, as you look at the current trading numbers, that one of the great strengths of the group is our spread, that we're in the UK, Europe, US. And you know not all of those markets have to be performing at once for the group to deliver growth. So it's been a difficult start to the year in the UK. I think many retailers have seen the same.
The economy has been difficult, but we've powered on in Europe, and we've done very well in the U.S. So, you know, one of the great strengths of our business is that we have this spread and, this range of customers we target. It's very good to see. It's been an incredibly busy year. I think as we look back on the year to 24 January 2024, you know, we've been very busy and on the corporate level, buying in minority stakes in Iberia and Central Europe, and a couple of other markets, continuing with the disposals of the non-core business that we announced last year. We've acquired or in the process of acquiring Courir in France, Hibbett in the U.S.
A very, very busy year indeed, and a very big year in terms of governance improvements. We've strengthened our board, we've strengthened the exec team, perhaps most notably, with Dominic, who's here, as our new CFO. Theresa's here as our new General Counsel. We've strengthened our panel of advisors. We've added Freshfields to the long-standing relationship we have with Addleshaws on the legal side. Bank of America have come on as brokers, and, you know, it's been a very busy year below the surface in terms of improving and strengthening, the business as it looks to the future and this exciting opportunity we have to develop a truly global brand in JD, and deliver outstanding growth in the years ahead. So our agenda today, is, we'll, we'll.
I haven't got a button to press, I'm afraid, so someone will have to just move the slides on. Thank you. We're going to have Régis next, talk about his business review, and then Dominic will come on and talk about the numbers, before Régis will return to complete this talk about strategy and how, where we are against the strategy. So thank you very much, and over to you, Régis.
Thank you, Andy, and good morning, everyone. So, you know, we had ended the financial year to January 2024, with a profit before tax, an adjusted item of GBP 917 million. In line with our revised guidance provided in our early January update. Overall, for the year, we once again outperformed the market with over 9% organic sales growth. In fact, we deliver more than double the market growth of 4.1%, according to our monitor. We gain market share in all the region we operate. We gain market share in UK, in Europe, in North America, and in APAC.
But despite this good sales performance, our group PBT is down 7% year on year, reflecting the investment we have made during the year in people, in system, especially around cybersecurity, in supply chain and in governance, which are critical to support our growth and to underpin our future growth. As announced in January, it means that our profit is below the market expectation due to combination of factors. At the end of the first half in September 2023, our group like-for-like were strong at +8% when we confirmed our initial guidance. Unfortunately, Q4 2023 was much more challenging, with a negative like-for-like in UK and Ireland of -3% in our more profitable region. We, and I should, have been much more cautious, especially with a very strong performance in Q4 last year, with nearly +20% like-for-like.
Similarly, we forecast a margin improvement year-on-year for Q4, predicting a less promotional year-end. Contrary to our forecast, the market was highly promotional, particularly online, which impact our margin and our sales in U.K., where we decided not to participate. The combination of lower like-for-like sales and lower margin than our forecast during our biggest quarter, 35% of our profit is made in Q4, with our ongoing investment, significantly our profit for the year. But I'm confident with the addition of Dominic and the improvement we are making in governance and finance and the forecasting process, and in our communication with you through quarterly update, we will provide more information and better guidance in the future. Meanwhile, we really believe and we, we strongly believe that our strategy is right, and let me highlight why.
Our Athletic Leisure fascia, JD and Community Brands in the U.S., deliver double-digit growth and double-digit PBT, and we are moving toward a double-digit market share in Europe with our accelerating opening plan and the acquisition of MIG and ISRG, which give us the opportunity to convert more stores to JD. The same is true in the U.S., with the acceleration of our store conversion from Finish Line to JD, the store opening and the acquisition of Hibbett. JD is becoming more and more a global brand, focusing our efforts on development outside the U.K. With 400 stores in the U.K., we almost reach a point where there is no more room for store expansion.
However, unlike most of UK's successful retailers, we have a powerful, profitable, and sizable JD business out of the UK, in the largest athletic leisure market in the world, in North America and in Europe, both with significant room for expansion. We have around 40-30% market share in the UK, but less than 10% market share in Europe and less than 5% market share in North America, so plenty to go after. JD first means that the JD brand is our first and foremost priority in all markets we operate. Building JD as a global brand is our core mission, and we'll deliver a Triple Double: double-digit growth, double-digit profit, and double-digit market share. So Dominic will now go through the financials, and I will come back with the details of the strategy. Thank you.
Okay. Thank you. Thank you, Régis. Thank you, Andy. So good morning, everyone, and thanks for attending today, and for those who aren't here, watching on the web. I've now been at JD since October, and it's been a busy few months, and I thought I'd share a few initial observations as the new CFO. I confirm my view that I had on joining that JD has a really strong business model that has all the ingredients it needs to deliver long-term growth and significant cash generation for shareholders. It has a clear five-year strategic plan to deliver the vision. JD has a great culture. It's hardworking, fast-paced, and very positive.
JD is full of people who are extremely passionate for the business and its success, and there's huge experience across the entire business, which is a massive competitive advantage, and selfishly, it's proved very beneficial for me over my first few months as I've got up to speed. Finally, I just wanted to address the reporting control environment. I know Andy has spoken before, about the work we've been doing on governance, risk management, and the control environment before I joined, and a lot has already been achieved. JD has grown quickly, and it's not a huge surprise that the risk and control environment is not as mature as you would see in a business that has been at this scale for some time.
Coming in with a fresh pair of eyes, and with the benefit of a new auditor, this has allowed us to review our areas of focus and fine-tune our plans, continuing the work already started to embed consistent controls, upskill capability, and upgrade our systems. This will be a multi-year journey. Working with the new auditors, I've reviewed our reporting and accounting, and we've identified a number of improvements as well as prior year adjustments, both positive and negative, which we've clearly identified in today's results. You'll see that most of those affect non-trading items, but we have improved the way that we report our like-for-like and organic sales. As previously announced, from FY 25, we will be changing our segmentation. Historic full-year comparatives are included in the RNS this morning.
Just a reminder, we're reclassifying the amortization of acquired intangibles into adjusting items from FY 2025. Okay, turning to a summary of the group P&L for the year. As you can see, we not only have the various improvements to reporting just mentioned, but the complication of an added 53rd week. The general rule is that to ensure a fair comparison with the prior year, we will use 52 weeks, unless stated otherwise, when we will use 53 weeks, but that's generally for statutory measures, cash flow, and balance sheet. On a 52-week basis, revenue is up 2.7% to GBP 10.4 billion or 2.9% on a constant currency basis. This was after the impact of disposals, both those made in FY 2023 and FY 2024, as we continued to simplify the group.
Like-for-like sales growth was 3.8%, and organic sales growth was 9%. These numbers are slightly different from what we reported in March, as we've improved the analysis and reporting of like-for-like and organic to include all our businesses within JD, and we've taken out any impact from disposals. Previously, even if something was sold in the year, it was included in like for likes up to the point of disposal. We felt that this approach didn't give a fair reflection of the underlying performance of the online business. We've included the adjusted quarterly, half year, and full year like-for-like and organics by region for you in the appendix to the presentation. Our gross margin was 48%, slightly down on the previous year.
This reflects the increase in store growth, driving a higher proportion of sales through our store channel as opposed to online, and the higher gross margin from the JD fascia growth, and that's been offset by the impact of elevated market promotional activity. The reported gross margin has been updated from what we reported in March as a result of the reclassification of marketing revenues in both years, from operating costs to cost of goods sold. The impact was a benefit of 50 basis points in both years. Operating profit before adjusting items was down 7.9% due to an increase in operating costs of 5.1%, around double the rate of revenue growth in the year.
This reflects the ongoing investment in our platform for long-term growth across such areas as our people, our supply chain, our systems, and our stores. The net financial expense fell almost 19% as better interest income from our cash reserves more than offset increases in our lease financing costs. On a 53-week basis, our PBT before adjusting items was GBP 917.2 million, in line with our guidance of 915-935, which was also given on a 53-week basis. On a 52-week basis, PBT before adjusting items was GBP 912.4 million, down 8% on the prior year.
Adjusting items were much smaller than last year, with the movement in the present value of put and call options, a loss on divestment of group companies, and the impairment of intangible assets and investments all materially lower year-on-year. So with the result of that and the reduction in adjusting items, statutory profit before tax was up 65.7%. Tax before adjusting items on a fifty-three-week basis went up due to the UK corporation tax increasing from 19%-25%, leading to an effective tax rate of 24.5%, up from 21.8%. Non-controlling interests on a fifty-three-week basis reduced due to the acquisition of various non-controlling interests in the year, of which ISRG and MIG were the largest.
This all meant that Adjusted Earnings Per Share fell 8% to 12.21 pence per share on a 53-week basis, reflecting the reduction in profit and the effect increased effective tax rate, offset in part by the benefit of the acquisition of the non-controlling interests. So now let's turn to the revenue bridge from last year to this year. First, we take last year's revenue and adjust for FX. That was worth 0.2 percentage points, so total revenue growth for the year of 2.7% on a 52-week basis was 2.9% in constant currency. Then we make adjustments for acquisitions and disposals.
For the base, we take out the FY 2023 revenue from the disposals and businesses held for sale in both FY 2023 and FY 2024 to get to a new base from which to calculate like-for-like and organic growth. We can then compare the rebased FY 2023 with like-for-like sales of 3.8%, slightly below what was previously reported before the changes to our calculation methodology, and new space growth at 5.2%, slightly above what we previously reported. Add these two up and you get the 9% organic growth we have reported today.
Then, to finish off the bridge from the 52-week revenue of GBP 10.4 billion, we add in the annualized revenue from prior acquisitions, in this case, a very small amount for Swim, and the FY 2024 revenue from businesses sold or held for sale in FY 2024. And finally, you can see the 53rd week, which added 1.4% to the total. To provide more color on our revenue trends, I thought it helpful to provide some additional analysis. By region, we saw strong growth in North America and Europe, and this has, in particular, further balanced our geographic mix. Adding in Asia Pacific, two-thirds of our business is now outside the UK and Republic of Ireland. With the majority of our capital expenditure and our prospective acquisitions focused on those regions, we will see their share of revenue continuing to grow.
We view our business as very much an omni-channel business. It's our job to make it as easy as possible for customers to choose how and where they want to buy. However, looking at the mix of revenue by channel, you will see an increase in sales from stores. This reflects the investment in new store space. Online sales penetration tends to follow in new catchment areas and a return of online penetration to pre-pandemic levels. Finally, product-wise, a robust performance in footwear has seen its share of sales increase, particularly given what was a weaker performance in apparel during the peak season. I'll now start to unpack the results, by region. To set the scene, here is an overview of revenue and operating performance by segment.
The overall 2.7% sales growth masks a strong 9.8% performance in our premium sports fashion segment. This was offset by a decline in our other sports fashion businesses due to disposals and a challenging year in outdoors. Operating profit-wise, a combination of pressure on margin and the investments we are making in the business more than offset sales growth in our premium sports fashion segments. This was offset in part by our other sports fashion businesses, which saw improved profit as we disposed of loss-making businesses. So firstly, looking at premium sports fashion in our home market, our longest-standing market, the U.K. and Republic of Ireland. I would describe the year in the U.K. and Republic of Ireland as being solid. With our market share as it is, there's less opportunity to deliver material outperformance of the market.
However, we did manage to deliver premium sports fashion like-for-like sales growth, and more importantly, given our strategy is focused on improving the quality of our stores and locations overall, we achieved organic sales growth of 2.3%. Sales were held back by our disciplined approach to the elevated market, market promotional activity during peak season, and our gross margin was up strongly in the year as a result. Operating profits were down almost 8% due to the increased investment into our people, systems, and supply chain, a large portion of which falls to the UK P&L, but some of the benefits do get seen elsewhere, such as our cyber investment and our upfront costs of systems replatforming.
Therefore, the operating margin declined by 1.4% to 12.8%, a trend we expect to continue into FY 2025, given the continued investment and a more challenging market. Finally, before I move on, I should flag that this is the last time we will report the UK and the Republic of Ireland together, as under our new segmentation, the Republic of Ireland is joining Europe. Now, looking at our European premium sports fashion business. It was a really strong year for sales growth, with like for likes of 10.5% and organic growth of over 25%, reflecting the 84 new JD stores opened during the year. There was good organic growth across all major markets, with like-for-like growth strongest in Southern Europe markets, where JD brand is growing in awareness and where there is lower apparel mix, too.
However, there was also a bit of pressure on the operating margin this year from a combination of lower gross margins than anticipated during the elevated due to the elevated market promotional activity across Q4 and higher operating costs as we invested to strengthen the platform for long-term growth in the region. Included in these costs were the costs of the Conbipel and GAP stores, which we incurred in between buying the stores and opening them, and dual running costs as we open our new Heerlen distribution center in the Netherlands. Moving on to North America, it's a slightly similar pattern. We saw good LFL growth of almost 4% and organic sales growth of just under 10%, with JD, DTLR, and Shoe Palace all delivering strong organic growth in the year.
Margins were down in the year, though, as the promotional activity in Q4 drove gross margins down, and we weren't able to recover in terms of operating cost through the peak trading period. Finally, in terms of premium sports fashion, Asia-Pacific, our smallest region, contributing 5% of revenue. Excellent growth, again, with strong double-digit like-for-like and organic sales growth. All markets performed well. Total revenue growth, though, was just 12%, impacted by exiting the South Korean market, where we closed 12 stores. Gross margins were a little under pressure in this region, too. It also is not immune to the elevated worldwide promotional activity we're seeing in the market, and this caused the operating margins to be slightly down year on year. Pleasingly, though, operating profit still grew by 4%.
Now, quickly looking at the rest of our sports fashion segment, where there has been a lot of M&A, during the year, which complicates the numbers. In terms of what we call other fascias, which includes sporting goods, other European fascias such as Size? and Macy's in the U.S., they all achieved a reasonable like-for-like and organic sales growth, with Cosmos in Greece and Cyprus the standout performer. However, overall revenue growth was down 18% due to the disposal of the remaining U.K. fashion fascias early in the year and the bankruptcy of the SUR business in Netherlands after we took control of ISRG. Despite the revenue decline, operating profit actually grew a little. This was because what we sold and what we closed, the U.K. fashion businesses and SUR, were either low margin or loss-making.
In terms of other businesses, which include our gyms and other non-retail, non-fashion businesses, it was a similar story, with revenue materially down on FY 2023 due to disposals. But again, as those disposals were not profitable businesses, we saw operating profit and margin grow as a result. And finally, on to our outdoor segment, which represents approximately 5% of our revenue. This comprises GO Outdoors, Blacks and Millets, plus a small number of smaller outdoor retail brands. Like-for-like sales were down 2.6%, and revenue was down overall by 2.1%. If there's a part of our business that is truly weather dependent, then it is outdoor, and the weather during the year didn't really suit, especially the mild autumn and the early winter we had in the UK.
However, in line with the rest of the business, we continue to invest, and we've taken action to support future growth of our outdoor segment, including restructuring our supply chain arrangements. So a small drop in revenue led to an operating loss in the year of GBP 7 million. With the work we've done on the supply chain, we expect to see an improvement in the performance of our outdoor segment in FY 2025. So with the P&Ls done, moving on to cash flow. We had an overall cash outflow of GBP 447.3 million in the year. This reflects a strong cash flow before M&A and dividends of GBP 215.9 million, notwithstanding investments in working capital and significantly increased CapEx spend.
With a GBP 611 million outflow following the buyouts of the non-controlling interests in ISRG and MIG, and a net cash outflow from disposals, which reflects deconsolidation of cash in the disposed businesses, plus the GBP 52 million on dividends, we have the total outflow of GBP 447.3 million. Despite the overall cash outflow, we still had a healthy cash and cash equivalents balance at year-end of GBP 1.1 billion. I'll now go into some of those items in a bit more detail. So starting with inventory, overall inventory was up GBP 126 million year-on-year. This represents about 15% of revenue, just up marginally on the prior year, which was 14.5%, and reflects our increasing revenue and store opening program.
Taking those factors into account, the UK, Republic of Ireland, and Europe have seen improved stock positions, but North America is up more than would normally be the case, but essentially reflects the phasing of ordering of stock for the new stores and the new season. As we expected, this has been unwinding through the first quarter. A major part of our cash flow is our capital expenditure. We have increased investment in support of our key strategic pillars. We spent just under GBP 570 million last year, about 5.5% of revenue, with the majority in our growth regions of North America and Europe. In line with our Capital Markets Day guidance, around 60% of our CapEx has been on store openings, underpinning our JD first and complementary concept strategic pillars.
I've been impressed by the approach we take to our store investment. It's very disciplined, a planning approach which includes, catchment area, competition, fit out, and a clear view on which fascias and cost model are right for which locations. All new store approvals, relocations, and extensions across the whole group come to a central property board, which Régis and I attend. Apart from some very few flagship stores, we apply a strict three-year payback hurdle. The remainder of our CapEx is principally on supply chain and IT. In the short term, more of that spend is on supply chain as we invest to improve efficiency and capacity across all our markets. As Régis will explain later, our IT spend to date has been more tactical, but will increase as we move towards more strategic work across our tech estate.
But you should note that a lot of IT spend now falls into OpEx, and I will continue to update you on this as our plans develop. The third major part of our cash flow is on M&A, where we saw a GBP 611 million outflow. It's been a busy year. I can't take any credit for that coming in only halfway through. We spent GBP 557 million on buying out the non-controlling interests in Germany, Malaysia, ISRG, Iberia, and Holland, and MIG in Eastern Europe. This importantly allows us to accelerate the JD rollout in these markets and to optimize business efficiencies, and is earnings enhancing.
We've also continued with the divestment of non-core brands, streamlining the group further to those fascias that align with our strategy, which in total was a net cash outflow of GBP 54 million, and as I said earlier, reflects the deconsolidation of cash in those disposed businesses. As we look to this new financial year, we have the acquisitions of Courir and Hibbett to complete, which will strengthen our complementary concepts in Europe and North America, and Régis will cover these in more detail later. Continuing on the theme of prospective acquisitions of Courir and Hibbett, I thought it would be helpful to lay out the M&A commitments that we have coming our way in the near term. All told, we have over GBP 2 billion of M&A commitments: EUR 520 million for Courir, GBP 1.1 billion for Hibbett.
The remaining material, non-controlling interest, the 20% of Genesis, the holding company for our North American business. We valued that at GBP 763 million in the accounts for FY 2024. This is before any impact from the proposed acquisition of Hibbett. But based on that valuation, illustratively, we would see close to GBP 200 million a year cash outflow from FY 2026. In terms of the impact on our balance sheet, we finished the year with net cash of just over GBP 1 billion, which equates to a positive net cash leverage of 0.6x EBITDA. Including lease liabilities, this would change to net debt leverage of 0.9x. On a pro forma basis, if we include Courir and Hibbett, we would move to a net debt position with pro forma leverage of 0.2x EBITDA.
And again, if I then include lease liabilities, our leverage would move to 1.5 times EBITDA on a pro forma basis. In terms of funding these commitments and business investments, first of all, as the cash flow slide showed, we are a cash-generative business. Secondly, we had GBP 1 billion net cash at the third of February, as well as an undrawn RCF of GBP 700 million and an ABL in the U.S. of $300 million, of which just $12.5 million was drawn at year-end. Finally, to maintain liquidity, with our new acquisitions, we have arranged new committed facilities ahead of completing Courir and Hibbett through a EUR 250 million term loan and a GBP 1 billion acquisition facility.
For completeness, as the chart shows, this new or the new and existing facilities mature by FY 2028, with a majority in FY 2027. The last few slides on our commitments, leverage and near-term refinancing commitments provide a good context for our capital allocation priorities. We'll confirm a formal capital allocation policy in due course, but I wanted to lay out our short to medium-term priorities. Two key aims for us are maintaining a strong balance sheet and, at this early stage in our strategic plan, maintaining flexibility to deliver that plan. Within that context, our current priorities are firstly, organic investment in the business. We have plans to spend 5%-6% of revenue, about GBP 600 million of capital expenditure a year. The majority of this is focused on our store rollout with clear payback criteria. Secondly, M&A in support of our strategy.
We have existing commitments with Courir and Hibbett, and we want to retain flexibility for M&A that supports our strategy and to buy out the remaining non-controlling interests. Thirdly, we recognize the importance of ordinary dividends. The dividend today is low relative to earnings, and our absolute dividend is small. Reducing cover over time as our investment plans reduce, will not materially impact on our ability to invest in the business and M&A to deliver our strategy. A standard capital allocation framework has a fourth limb, as this slide shows, delivering incremental capital returns to shareholders. This is not a priority today. There will be a role for this in the medium term as the investments we are making scale back and we see the returns coming through. And now on to our Q1 performance. It was in line with what we were expecting.
I think I said when asked the question back in March, what I thought LFLs would be for Q1, and that flat would be a very good result. That was never our target, and a small decline of 0.7%, given the comparative last year of 14.5% growth, is a good platform for the rest of the year. The comparatives start to ease in Q2, which is partly why we think LFLs will pick up as we go through the year. It's still a tricky market to read in Q1. We had changes to Easter dates, possibly still some resetting post-COVID in terms of underlying month-by-month trends, and continual promotional activity online and in apparel, all of which are making day to day and week to week quite volatile.
The UK has been, as Andy said, the tougher market in the first quarter, but its LFLs on a two-year basis are broadly flat. We saw like-for-like growth in both Europe and North America, and outside the UK, organic growth was strong in the other three regions. In terms of margin, it was also in line with our expectations at 48.2%, in line with last year, with our focus discipline on sales and profit, on profit in the UK, offsetting the impact of elevated market promotional activity, which we have seen continue through Q1. My last slide, FY 2025 guidance.
We are maintaining our guidance of PBT before adjusting items of GBP 955 million-GBP 1.035 billion, and that's post the accounting change we told you about in March. Market conditions haven't changed materially yet. It's still quite promotional in some markets, particularly online and in apparel. And as I said earlier, Q1 was in line with our expectations. The overall assumptions we listed in March are also still the same. And finally, just a reminder that our guidance excludes Courir and Hibbett. When those deals are complete, we will update our guidance. So thank you for listening. I hope that was helpful and informative, and I'll now, just before Régis talks you through the strategy, share a video with you.
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Good. Thank you, Dominic, and it's a good film to summarize our year. So, as I previously mentioned, I'm confident that the strategy we announced in the Capital Markets Day is the right direction for the group, and I will go in more details. As a reminder, our strategy is built on four strategic pillar, focusing on making us the most successful sport-based fashion, footwear and apparel retailer in the world. JD brand first. JD is our first priority. Building JD as a global brand is our core mission. JD complementary brand, to target a wider and diverse customer and contribute to our scale and market presence. JD beyond physical retail, building an infrastructure to support our growth. And JD to be the best for our people, for our partner, and for the community we serve.
So if we go to JD first, you know, just to remember everyone, we play in the most attractive segment of the market, which is in between sport and fashion, which we call athletic leisure. According to our monitor, the growth on average for the last four years has been around +4.2%, and they forecast a +6.6% for the coming five years. This is an average. You should not forget, this is fashion, it is retail. It means that there is not, it's not a linear growth. You need constantly to innovate, to bring new product, new material, but the fundamental of the market we operate are strong. As we see, formal wear and formal shoes continue to be replaced by some comfortable athletic leisure wear and sneaker.
You see that in the street, you see that in the workplace. Since COVID, the trends toward more comfortable, more versatile clothing continue and accelerate. Following Q4 weak performance, we did conduct some internal research, and it show us that it will likely to continue. 60% of customer said that they will spend more than they currently spend on athletic leisure. So... Our customer is a young customer, is a young adult, so 16, 24 years old. These customers move fast. They wear the latest brand. They take on new trend quickly. They want more assortment, more access, more choice, more brand, more head-to-toes looks that blur the line of sport and fashion. They are looking at global trends, via TikTok, social network. They are global, and they are not mono brand, and I think that's really important.
They want to be free to mix brand, to mix sport and fashion, to shop with their friends in a multi-brand environment, in a loud environment. You know, the key complaint of our customer is that the music is too loud, which is part of what we like to do... This gives us this unique relationship with the brand, because that's the value we create for the brand. We see the trends before them. We see the trends happening. We saw the terrace trends before Adidas, and we operate globally, so we can leverage that across the globe. We launch, we launched Shamba in exclusivity in Australia because we did see it coming before our local competitor. This is more important, they love the JD brand. And the next slide is to highlight our potential and to highlight our potential by region.
If you take UK, where we are at the mature stage, as a benchmark in terms of number of stores per inhHibbettant, and calculate the potential over the different regions we operate, where we have already presence, you can see we have a potential of 6 times more stores in Europe, 17 times more stores in North America, and more than, even more than that in APAC. That give us this global player. This give us the opportunity. This is only. We only have 3 countries where we have more than 10% market share: UK, Ireland, and Australia. Meanwhile, in all the countries we are operating, we have already a significant presence. We have people, we have infrastructure, we have customer, we have brand love, and we have profitable stores and countries with a significant potential to grow.
And if you look at our operating metrics, we put the key metrics that we have for a retailer. The most important one for me is the store productivity, space productivity. And you can see it's almost the same by region. This is our four region: UK, Europe, North America, and the rest of the world. And you see the store productivity being almost the same, and it's 50% more than our peer group. So this give us, you know, the quality of our concept. This is partly linked to our mix with a higher penetration of apparel, and it's linked to the fact that we are using the space much more efficiently. This give us the ability to secure the best location in the best mall and deliver superior return.
If you look at the profit, all our region are profitable, and our EBIT margin is significantly higher than our competitor, and double-digit, except Europe. As you can see, Europe is the only region where we are below the double-digit line, which is mainly linked to our supply chain costs, which has not been adjusted post-Brexit, and with the double running cost of our warehouse, and due to our accelerated store expansion. The same in term of digital penetration, e-com penetration is lower in Europe, linked to our supply chain, as we are using our UK warehouse partly to fill the order to Europe and with a low service to our customer. But our penetration show how powerful is our omni-channel proposition versus pure player and D2C.
Looking at the first metrics, JD brands are delivering strong growth in the last 5 years, almost 5 times the market average, with particularly strong growth coming from our new region, Europe, US, and APAC. That show our potential for the coming years. Our mission to extend our footprint globally to capture this growth, we'll continue to expand our store network. We have done extensive work to define JD brand store potential by region, by country, and share with you our target by market, with around 800 stores in North America for JD alone, on top of our community brand, and 900 stores in Europe. We did commit it to deliver around 200-250 new stores per year, with a strict and proven CapEx process and discipline, as Dominic highlighted.
Last year, we opened more than 200 stores across the world, and the first year of those stores has been outperforming our result by 20%. In North America, we opened 87 stores, 97 stores, and we are on track to open around 100 stores for 2025. In Europe, we opened 84 stores last year, particularly in markets like Italy, thanks to the acquisition of Conbipel. In 2025, we plan to open more than 100 stores, thanks to converting ISRG stores, Sprinter and Sport Zone to JD, and MIG stores, Sizeer, in Eastern Europe to JD. Last year, for the rest of the world, we signed our first franchise agreement with GMG for the Middle East. We have signed another agreement for South Africa. It give us a very efficient model with high return on investment.
Our first franchisee store opened a few weeks ago in Bahrain. We will have other opening this year in KSA, UAE, Qatar, Egypt, and South Africa. In Asia, we acquire the minority interest of our Malaysian, Thai, and Singapore business to take full control of the operation, and we have seen huge improvement by using and leveraging our Australian team. In the UK, we opened 21 new store last year, bringing us to the total of 400 store. We plan to around open 10 new store by 2025. We are more focusing on extending our store, giving better store to our consumer. This show a strong potential for growth and market share gain across our key region with excellent return.
If you take JD complementary brands, to support the JD brand, we have complementary brand, to target a wider and diverse customer and contribute to our scale and market presence. When I took over the business, we had 65 fascia, which create significant complexity and risk. Meanwhile, our 6 core business on the left here were delivering 90% of the sales and 95% of the profit. Based on this, we have driven a program over the last 2 years to divest and to rationalize those businesses and fascia that do not contribute to our core. Believing that less is more, more focus and more growth. We have done now most of the cleanup, with only a handful business to finalize the divestment. At the same time, we rationalize this complementary brand around three pillar.
The first one, that is around to leverage our family female fashion concept. This is Macy's in the US, Sizeer in Eastern Europe, and the recent acquisition of Courir in, in Europe, subject to relevant approval. Courir is a great asset to add to our portfolio. In 2022, Courir made a profit of EUR 50 million and a revenue of EUR 600 million. They have around 300 stores across 6 countries in Europe, and most important, they appeal to a very different customer, the female market, which is underserved in our industry. And we believe that with Courir we have the right offer and the right concept to respond to her. Second, our community brand. We have, Shoe Palace and DTLR, which are located in local communities with a very different customer.
The proposed acquisition of Hibbett is an exciting opportunity to grow this community offering in the US, while we cover, which I will cover in more detail shortly. Finally, our sporting goods business. In Iberia, where we have Sport Zone and Sprinter, number 2 of the market, and Greece, with Cosmos, number 1 of the market, and our outdoor brands in the UK, which continue to offer an extending range of product to our customer. Let's go into more details around Hibbett. So this is the way we look at the US market. On one side, you have the A and B mall and the key high street. They are destination retail, where customer are going to get the best experience, the best brands, the best retail, the best entertainment and the best F&B. Customer will typically drive 30-45 minutes to go to those mall.
Those locations are JD brand locations, where we are giving U.S. customers the best retail experience, a unique and exclusive global offering. On the other side, you have a second proposition, which is community retail. This is a convenient offer for the community at walking distance of the store or quick drive time. They are strip mall, C and D mall or street locations. The store is offering a more limited range of brand and product, targeting to the specific need of a local community. This is where most of the portfolio is for DTLR, in the east part of the country, and Shoe Palace on the west, and where Hibbett will play in the central of the country.
If I take a little bit more about Hibbett, they have a strong brand equity, they have a loyal customer base and an excellent relationship with the brand, and they are offering a physical presence to the brand, with a customer that D2C is not able to reach. They have 1,150 stores across 36 states, with 80% of those stores located in the community, making them easily accessible and relevant. They are offering a powerful omni-channel experience with a full integration between online and offline. Hibbett is one of the two Nike U.S. Connected partners, demonstrating the close relationship and the added value of Hibbett's proposition for Nike. Thanks to Nike Connected, there are exclusive and premium Nike products they can offer to the market.
The company is strong financially, with GBP 1.7 billion turnover and a profit before tax of GBP 132 million. If you take around location, the location, Hibbett store location perfectly complement our existing portfolio, as I said before. Shoe Palace, strong presence, West Coast, DTLR, strong presence, East Coast, and Hibbett's strategy, located in smaller town, community area in the southeast and central area. This footprint fills the geographical gap between our other brand, and with less than 10% overlap with our existing portfolio. If you look at our track record in US, it's very impressive. We bought Finish Line in 2019. At that time, the revenue was $1.3 billion, and the business was loss-making, $30 million loss. In 2022, we bought Shoe Palace. At that time, revenue was $0.5 billion and a profit of $50 million.
And we bought in 2021, DTLR. At that time, same size, $0.5 billion turnover and a profit of $20 million. So if you look at—if you take each of those acquisition, and we took them to another level of performance, by 2023, our sales in the US reached $3.9 billion, which is $1 billion more compared to the addition of the historical sales of the acquisition of the three business. And we are making a profit of $361 million, which is 10 times more than the profit of the business at that time. So the proposed acquisition of Hibbett Sports means that our sales with will reach on a pro forma basis, close to $6 billion in the US, $5.9 billion, which will put us beyond Foot Locker in term of sales in the US.
JD, beyond physical retail, one thing we need to be mindful, and he has said that in his introduction, is that JD has not built the infrastructure, the risk management in the organization for a group of our size. There is a lot of work to be done to build an infrastructure and to develop a back office capability to support our business and our growth. We are focusing on three pillars. The first one is supply chain, building a distribution network with the capacity to support our growth in North America, in Australia, and in Europe. Second pillar is technology, starting by security, cybersecurity and digital. The third one is around data and to build a local loyalty ecosystem to capture and leverage our data.
If I go first on our supply chain, and if you look at different region, in U.S., we don't have enough capacity in our existing warehouse to support our growth. The acquisition of Hibbett will give us more capacity and a stronger distribution network. In APAC, we will open a new warehouse in the coming 12 months to support our growth. But our priority is Europe. With Brexit, it is no more competitive in terms of cost and speed to market to use our U.K. warehouse to serve Europe. A new distribution center in Ireland will give us the ability to serve our European store from this warehouse. Right now, Ireland is up and running, as Dominic said, but with manual operation. It means that we continue to use our U.K. warehouse and an existing warehouse we had in Ireland to feed the store.
This will move to automation in 2025. That means that we can stop gradually using our U.K. warehouse and old facility and stop to incur the double running cost. In 2026, we'll start to use this facility for direct-to-consumer order. This will allow us to deliver order straight from the distribution center to our customer across Europe in on average one day or same next day or one day after, which is not the case today. Those improvements are crucial to increase our profit in Europe, and this will have implication for our U.K. supply chain, too, by reducing the volume of order fulfilled in the U.K. for Europe. If I look at our system, the first priority has been security. We are putting significant investment into improving our cybersecurity.
We have built a new team to better safeguard our system and our customer data from any potential threat. Second priority, omni-channel. To make sure that our online and in-store shopping experience are seamless, we are re-platforming our e-commerce. We are making it easier for your customer to shop how they want, when they want, and where they want. Third priority, our tech strategy. This involving reviewing and improving our existing system across the board to support our growth and enhance our overall operation. Last, our data. We are building and scaling our STATUS loyalty program that we had in the US to build an ecosystem to deliver more service, more product, and an improved customer experience to our customer. It's an application-based loyalty program that give us a direct communication channel with our customer.
In the U.S., our JD STATUS program has been live for a while, and we have seen over 5.1 million customers shopping through it in 2024. Those loyal customers account for over $1 billion in sales, with an impressive attachment rate of 38%. This shows how valuable and engaging our loyalty program is for our customers. In the U.K., we launched a program six months ago. We had over 1.2 million downloads on our loyalty customers, who have spent more than GBP 0.2 billion through the program. This quick adoption and high level of engagement demonstrates a strong connection our customers feel with JD Sports. Looking ahead, we are excited to expand our JD STATUS program across Europe, with a launch in France planned for the second half of this year.
This will help to build our data and understanding our customer, and to use to give a better service to our consumer. JD people, partner, and community. Our people, partner, and community are the heart of everything we do. We want to be the best for our people. Our people are the driving force behind JD growth and success. Without our people, we will not be here. Every achievement has been made possible by the dedication, the talent, and hard work of our team. One of the things we have done is to make sure that we reward them in the right way, and I think we have invested GBP 70 million in pay increase last year. This is on top of the minimum wage increase of GBP 30 million. We have improved training and development.
90% of our store manager are going through our program and are being trained by us and our internal promotion. We have a greater global system, and we will be live in September. That make us ability to leverage our people, not only within the country we operate, but globally. In terms of ESG, we have retained our A-minus status, which put us at one of the best retailer in terms of where we are in terms of sustainability and status. So as a conclusion, four priority for next year five priority for next year. The first one is trading. As Dominic has said, it's quite volatile, and we are doing our best in order to take all the opportunity in terms of sales in our different market. Second one is continue to open our doors.
We have a strong growth, strong organic growth, and we have a plan to deliver more than 200 stores next year. Third one is around integration, integration of the acquisition of Courir and Hibbett. Fourth one is our supply chain and mainly Ireland, to accelerate, to make sure that this lands properly and deliver what is supposed to deliver in terms of productivity and in terms of service to the store and to our customer after. The fifth one is around e-commerce re-platforming. We strongly believe, as I said in introduction, we have the right strategy. We are becoming more and more global and leveraging on the different market to increase our market share and to deliver more to our customer and to our shareholder. Thank you! And the film, oh, I forgot the film on the community. Oui.
Okay, we'll start with any questions in the room, I guess. And we'll start on the front down here, shall we? We'll come back to you in a sec.
Thank you. Hi, good morning. It's Grace Smalley from Morgan Stanley. Thank you for the detailed presentation. I guess I'll start on the first one. It's more for you, Dominic, given your very helpful comments on the last conference call of Q1, flat like for like, being a very good outcome. As you look ahead now towards Q2, given the comments you made on volatility, but then at the same time, you have a much easier comparison base, you have upcoming sports events. As you look at Q2, what are you thinking in terms of the potential range of outcomes, and what you're seeing in May and how that varies by region?
Thanks, Grace. I won't give you forecast in May 'cause we need to look at the course as a total. Our comparatives, you say, get easier as you go through the year. It does remain volatile. We are seeing, you know, positive trends coming through as we've worked our way through the first quarter. So, I expect to see the second quarter being positive. We'll need to go through the whole quarter before we see the sort of full extent of that and we'll update in August.
Perfect. Thank you. A second question would just be on the fashion trends you mentioned. You mentioned how you were very early in identifying the terrace trend, and it does seem we've seen this kind of big fashion shift, I guess, from chunkier shoes to terrace shoes, low-profile shoes. What are you seeing now today as you look ahead in terms of consumer fashion preferences for footwear? And typically, how long do you normally see these product life cycles last?
Oh, that's a, that's a long question. We have nice summer shoes. I think it depends on how the brand is, and how good the brand is, is managing that. Because you, you have seen, if you take Air Force 1, which is still our number one shoes, the trend has been long, and I think the cycle has been very long, and it continue to be very successful, and you have seen some other things moving more quickly. So I think what we are seeing definitively is that customer, because they are using more and more sneakers, they want to have more and more shoes, more and more brands.
So we see more diverse, more diversity, and, and I think that we see a, a huge appetite for newness. So we see the success of the launch of Nike Dn, which is mostly linked to customer want something new, and they keep wanting something new. At the same moment, they want to renew their Air Force 1 and that. So I think that it's really I think the growth that our monitor is showing is really the fact that you are now having more and more shoes and you want to have more and more diversity, more color.
Perfect. Thank you very much.
I think we go to you now.
Hi, yeah, morning, guys. Ruben Pathmanathan from Peel Hunt. So the first one is on, brand product innovation. You have a good, visibility on product pipeline, but do you like what you see, and how much input does JD itself have on the design process?
So yes, we have been, yeah, we like what we see. We have been with Nike in Paris to show—they show us all the innovation, and they include us in the process of by taking our feedback, taking our buyer before the product is fully designed, to make sure that we give them the feedback. They are designing the product, we are not, but we are giving the feedback, and our feedback is more and more taken into account, and everything we have seen is very exciting. I think it was mentioned by Dick's two days ago, and I think we see the same things, and I think that it's quite refreshing to see all this new product coming.
Cool. Yeah, second one is just on markdown activity. So it looks to be moderating, I guess, in the U.S., according to Foot Locker and Dick's. Are you seeing similar activity across your stores there as well?
No, you know, we have never been promotional, so I think that it it's something that it's linked to stock position, and I think that you have seen that stock positions seem to be in a better place. So we've seen that at the same moment, apparel is more promotional because it's more weather-related, more volatile, so people get. You know, it's part of, you know, what makes a fashion retailer. I think that Andy would say that it has been over.
You know, you have good season, bad season, and you need to get rid of stock. So I think that, we are in a normal promotional environment, but it's still a, a high promotion, especially, and as Dominic said, I think online player are suffering because I think that customers are going back and are looking for an omni-channel experience, and I think that they are struggling, and so they are more promotional, and that impact us in some of the country.
Okay, thank you. And just, another one on, how the new acquisitions are going. What synergies are you sort of expecting to see?
So I'm not giving any forecast on this one because it doesn't depend on us. So that's. So on Hibbett, we have filed 70 days ago. So there is a first hurdle, which is in 10 days time, where we will have the answer. So either there is no question, and there is an approval, and that go, and after that, we go to the AGM for Hibbett to approve that. So that's one of the scenario. The other scenario is that they have some question, and we start to have the process about question, but that's open another 30 days. So that's a process. So it, it, we, we believe that it could be quick for US. For Europe is more com, is, is a longer process. It's now 12 months.
We have answered all the question. We are looking to file in the coming days, in order to put the process on the clock. So after that, there is 30 days, and after at the end of the 30 days, it's either approved or either we go to phase two, which is another long process. So that's where we are. So it's not under our, you know, control. We would like to be quicker and to control, but it's not under our control.
Okay, cool. Thank you.
Morning, it's Warwick Okines from BNP Paribas. Just carrying on about the question of newness and innovation, Regis. I think previously, on the last call, you talked about that landing sometime during H2, but you weren't sure when. Do you have any better visibility about whether that will meaningfully contribute to H2?
I think that if I don't think it will be meaningful in H2. I think it will come in H2, and it's the time to scale, the time to get there. And it's important for the brand not to burn and to go too quickly. So I think that, so we are clear that we want to make sure that the product comes, takes the time to get the consumer response. There need to be some scarcity at the beginning to create attention from the consumer, and that should come. So I think that it will come in H2. It will not have a meaningful impact in H2, but at the same moment, in H2, we have much lower comps. So I think that's what we are.
Plus, we have, you know, the Olympic Games, the European Cup, which will create interest in sports, and I think that always benefit to us.
Thank you. Secondly, could you comment a little bit more about the UK performance in Q1? Just how are you thinking about managing that? And I presume that within the flat gross margin year on year across the group, that the UK margin is stronger.
So UK margin is always stronger than the rest of the group, is a little bit higher than the rest of the group. I think, you know, when you look at the two years like-for-like, it's a flat like-for-like. So we had huge comp in UK in the first quarter last year. I think we see, you know, as Andy mentioned, I think we have seen most of the retailers been struggling a little bit in the UK more than the rest, and I think that we've seen the same. We have a higher apparel penetration in UK, which is more volatile than footwear.
So footwear has continued to do well and is quite steady. I think that it's apparel, which is up and down, and it's weather related It's, it's, it's more promotional because retailer can, and especially online retailer, can be very nervous about stock, and they're starting to do promotion. So that's what we are facing, but we are in a good place, and footwear is very strong and very steady.
Thank you.
There's some very encouraging things in the UK as well. I mean, our in-store conversion, the people who come in, and the people, the number of proportion we sell to is very strong, and that's always a, that's a good sign. You know, it's a kind of-
Yeah, I think the thing I'd add to that, I mean, continuing what we said, after the peak season, we are focusing on profitable sales in the UK. We're not participating in the sort of promotional environment, which are particularly online, and therefore, it's not a surprise that our sales are backwards a bit, but that, to go to your point, it does support margin in the UK business.
Thank you. So a third and finally, really boring question, but, previously, Dominic, you'd said that the 53rd week should contribute GBP 10 million-GBP 15 million of profit, you know, logically, but it only contributed to sort of GBP 5 million. Is there anything particularly you'd call out for that?
No, I think it's just fine-tuning the numbers as we went through the year-end process. It's, there's a lot of what should we say, assumptions you make as to what costs you take in that 53rd week, and I think this just reflects probably an even allocation, even though it's a relatively low trading week of the year.
Got it. Thank you.
Thank you.
Okay, if we go to questions from the conference call now. George, if you wouldn't mind just taking over on that. Thank you.
Most certainly, sir. Ladies and gentlemen, once again, if you wish to ask a question, please do press star one. Our first question today is coming from Monique Pollard, calling from Citi. Please go ahead.
Hi. Morning, everyone, thanks for taking my questions. The first question I had was just whether you could give any commentary on any geographic regions where you feel your inventory might still be too high. Obviously, you mentioned the elevated levels in North America, but that's really due to the new stores and that you've seen, you know, good momentum so far, but just whether there are any other call-outs in terms of high inventory. The second question I had, which is a technical one, whether the 48.2% gross margin that you talked about for the first quarter, if the benefit of the reclassification for marketing income was also about 50 basis points there, just so that we can understand how that compares to what we had forecast?
And then just the final one, and apologies if you've already said this, but, Reggie, I, for some reason on the call, we can't hear your voice coming through in the way we can with the others. Which is on the re-platforming of the e-commerce in the second half of the year. Just trying to understand, I guess, that's a global re-platforming for the JD brand rather than being any country specific. And, you know, whether you've done any trials, et cetera, that give you a sense of what sort of uplift you could see either in conversion or e-commerce penetration as a result of that re-platforming. That'd be really helpful. Thank you.
Thanks, Monique. If I take the first two questions, and I'll hand over to Régis. On stock, it's really what I said in the presentation. I mean, stock is slightly up year-on-year at the end of February, 14.5%-15% of sales, so it is marginal. And yes, the US was the contributor to that, where it's really a phasing point, you know, bringing in sales for our store openings and just phasing of new season. We've seen that unwind as we've been through the first quarter, so I'm not sitting here today concerned about our stock position in any particular region at this point in the year.
On the 48.2% gross margin, the reclassification is consistent in both years. We have reclassified across the board, so, think of it as being, I think we said it's sort of slightly in line with the prior period. So just think of it as sort of being adjusted for the prior year as well. So I wouldn't take that into account in looking at the trend year on year.
Concerning the re-platforming, so we are doing... So we, we are using the same, so we are moving to commercetools in both North America, US and, MEA. But, we are doing the two project in, in parallel, so, so there is no big bang, and it's not, it's not the same timing. We have, we will start in Italy, so we will start in one of the markets. So we have not yet start, do anything, so we don't have yet some metrics to share with you. The first country we'll be live is Italy, and will be second half of this year.
Thank you, Monique.
Our next question now will be coming from Richard Chamberlain, calling in from RBC. Please go ahead, your line is open.
Yeah, thanks very much. Morning, guys. First one is on Korea. I just wondered if you can update us on where you are in that process now, and what's your general expectation of when that deal might complete? And the second one, Dom, is on the expectation on working capital. Sorry if I've missed that, but I wonder what your sort of general expectations are for the coming year, and anything you can say around sort of phasing on working capital, that would be helpful, thank you.
So Korea, as I said to you, you know, we have answered all the question. So we are ready to file, and that should be done next week. So that means that after that, it's 30 days for the Antitrust Authority to look at our filing and to come back to us with a feedback. It's either they will, it will be done at that moment, or either they we will go to phase two, and phase two is another 90, 3-4 months. So we embark on a new process. So that's the status of where we are in Korea.
On working capital, we had about GBP 200 million outflow, just under GBP 200 million of outflow last year. There will continue to be an outflow of working capital. Clearly, we're growing the business, investing in stock, opening new stores. So I expect it to be in sort of the GBP 100 million-GBP 200 million range. Phasing wise, we tend to have sort of more of an inflow in the first half and then an outflow in the second half as we go through peak season and then start to rebuild for the rest of the year. But I'll be able to give more update on that as we get through to our half-year results, Richard, if that's okay.
Okay, great. Thank you.
Thank you much, sir. Our next question will be coming from Kate Calvert, calling from Investec. Please go ahead. Kate, your line is open. Could you please just check it's unmuted from your side?
Yeah, morning. Hopefully, you can hear me. I've got two questions. I just want to try and unpick some numbers on the European performance last year. Could you help with how much additional cost was incurred due to the preopening costs of, and Courir stores relative to the sort of normal, ongoing preopening costs that you tend to have every year? And also, could you give an indication of the level of dual running costs at the moment with Heerlen? And my second question is on the US, again, trying to unpick that one. How much did the sales performance vary between the, different fascias? And also the promotional activity pre-Christmas, did this disproportionately impact any particular fascia? Thanks very much.
So, on the dual running costs, it's around GBP 10 million for the stores and about GBP 10 million for Heerlen as well. So clearly, as we've opened those stores, the GBP 10 million related to the pre-opening cost falls away. We will continue to see that GBP 10 million of dual running cost slightly higher, about 12, I think, this year for distribution centers. Régis said earlier on, we've started operating that center, but it's only in a manual operation at the moment. So we're continuing with our other distribution centers in Europe in support of that until it's in full automated operation.
And then, in terms of the different fascias, overall, the sales in the U.S. across JD, Shoe Palace, and DTLR were all above 7% growth last year, so they did well. I think Finish Line is weaker, and that really just reflects the transition of that brand over time to JD as we convert that, and therefore, you know, our focus is absolutely on the sort of go-forward brands that we have into the future. I think that was the question. Have I, have I missed anything, Kate?
Yeah, that's correct.
The other piece was just on promotional activity.
Oh, okay.
Did that disproportionately impact the profits of any particular fascia?
Yeah, I think on this one, I would say that it's the way we react to it. As Dominic has said, in U.K., we didn't follow, so it impact our sales, but not so much our profit, or our profit through our sales, but not our margin. And in U.S., we participate in it, so it impact our margin. So the way we react to it at the end doesn't really make a difference. It impact our profit, but in a different way. In U.K., more in term of lower sales, and in U.S., lower margin.
Sorry, I do remember your original question now. It didn't affect any one brand in the U.S. more than any other, so it was sort of general across the U.K., U.S. market.
Perfect. Thanks very much.
Okay.
Thank you for your questions, ma'am. Ladies and gentlemen, once again, if you have any questions, please press star one at this time. We'll now go to Alison Lygo, calling from Numis. Please go ahead.
Good morning, guys, and thanks for taking my questions. Two for me, please. First one is on the UK, so the -6.5% like-for-like in Q1, wondering if you could add a bit of color on volume and price and what's underlying that there, please. And then just anything in terms of category within apparel to call out as being a bit slower to turn. And then perhaps how you're thinking about sort of managing inventory against that sort of trading backdrop. And then the second one is a bit more technical. On the Genesis option, so I noticed that the balance, the option, in terms of liability is just under GBP 800 million pre-Hibett.
noticed in the release that the max payment has now increased to just under GBP 1.5 billion from GBP 1.2 billion. Is that the reflection of the Hibbett going into kind of the agreed terms with the minority interest there? And then, also just to make sure I'm understanding correctly, you showed the cash flow, which is really helpful. Thank you, Dominic, based on current option valuation, but just to make sure I'm reflecting it right in my model, that balance sheet liability is a kind of discounted number, not actual cash flows, so we should be expecting the cash flow to be a bit higher as we're modeling through it once we unwind that sort of discount. Thank you.
Good. Thank you, Alison. Right, some interesting topics in there. Starting with, UK, yes, it was, negative 6%. As Reggie said earlier on, it was, broadly flat on a two-year basis, and, you know, given the scale of the UK share that we have, it's, you know, it's difficult for us to outperform. So a 6% outperformance last year was very strong. As we've come into this year, as we said at the end of the peak season, we have been more focused on profit in the UK than we are on sales for sales' sake. And we haven't been participating in the, what would have been a sort of more promotional online market.
So actually, the -6% is pretty much in line with what we expected, in terms of managing sort of sales in what is a difficult and volatile market, in the U.K. It does support margin in that business. So I think overall, that sort of gives you maybe some flavor around where we are with the U.K. market. And just to unpick, you know, if we then move beyond the U.K., we were in strong double-digit performance last year for U.S. and Europe, and we've been positive in those markets. So I think actually, Q1, very solid, good, actually, when you compare where we were last year.
On the question around inventory, one thing I've been particularly impressed by coming in here is how well our commercial and trading teams manage and look forward to what's coming. So, you know, as part of what we're doing around not chasing sales online in the UK, we have been managing our stock appropriately around that. So I think at this point, I don't have any concerns that we'll have a stock issue arising from that. And then in terms of the categories within apparel that have been working strongly-
Yeah, I think we've seen the fleece continue to be soft and moving to different materials, that will be the highlight, and apparel has been weaker. Footwear has been good, so that will be the highlight.
Yeah. And then Alison, two very, very interesting questions. Deep in the detail of the complexity of JD, on the cap for the Genesis put option of 1.2-1.5, I'll be honest, it was a mistake. It should have been 1.5 all the way through. So part of what we have done through this year end is go through every single contract and every single arrangement with a fine-tooth comb, and that has been updated. So it's not a reflection of anything to do with Hibbett or any change. It should have been 1.5 in the prior periods. And then on cash flow, again, you're absolutely right.
Rather than coming up with another estimate, I decided that using the accounting valuation at the third of February was the best number to use. But you are absolutely correct that the actual... That's the present value of future cash flows. The actual cash flows will, when we get there, be slightly larger than that. They will also be stepped. I put them in the slide flat, just for illustrative purposes, but clearly, they will reflect, you know, hopefully, growth in that business over time.
And the final thing I would say is that, as at the third of February, we hadn't obviously announced or completed the sorry, my mistake, the Hibbett acquisition. So, in future periods, we will update you on the impact of the Hibbett acquisition on that Genesis put option and the valuation that goes with that. It is a hugely complex area, and well done for spotting that. Thank you, Alison.
Great, that's super helpful. So sorry, just one quick follow-up on that. So there, you've mentioned there that it should step up in terms of you showed the flat completely understand we do that, that's, that's helpful. But the option kind of valuation that crystallizes on the last year of EBITDA rather than kind of 25 when the first option crystallizes.
Yeah.
Is that correct?
Yeah, the way it works is-
Sorry, I really in the sense of this.
Yeah, no, it's fine. It's fine. It's become part of my life over the last three or four months. The way it works is that a valuation is struck at the end after the FY 2025 year end, and at that point, 25% of the option vests, then another-
Yeah
25 a year later, so that's why it steps up. So if the numbers were the broadly GBP 200 million a year that I put there, it would probably start lower and then grow to a higher number at the end.
Grand. That's it.
Thank-
Thank you so much.
Thank you.
Thank you, Alison. We have no further audio questions at this time.
Okay, thank you. Well, I think that gives us a good run round. I think it's been a good meeting. Thank you very much for those who've attended on a Friday in the city.
Often.
For those of you dialing in, I hope the weather gets better this weekend. Thank you very much for all your time. Thank you.
Thank you.
Thank you.