Peel Hunt’s Post

Transcript

JD has enjoyed the last month. It completed its ��900 million acquisition of Hibbert in the States. It enjoyed a strong share price run across a positive second quarter statement and most importantly of all, of course, is joined forces with the finest football club in the world, Aston Villa. Now this video is about a trip we made to to Alabama and Georgia to visit Hibbett. Now Hibbetts about 1200 stores across 36 States and the two fascia Hibbert Sports and City Gear. Now, the customer base is predominantly black, American and Hispanic and this will be a complementary concept. It'll go into that bracket of of fascia alongside DTLR in the States and Shoe Palace. You won't be seeing bad flips. You won't be seeing these stores converted to finish lines. Finish lines are mostly in moles. And as I mentioned, these stores are mostly shopping centre stroke neighbourhood stores now built on Hibbert, it was founded in 1945. It floated in 1996 and was really on the tear in terms of. A new store openings from around 2002 to the end of the the last decade. A bit of a change in the in the in the retail mix, though over the last 10 years it's moved quite a long way away from a lot of replica kit and and licensed product in the mix and and move towards a more lifestyle stroke. Sports fashion appeal within that footwear has, as you can see from this chart, become a much bigger part of the mix. But interestingly, there's a very large percentage of the mix with Nike. Now 73 percent is the biggest number ever for that number and a few of the septics, a few of the Bears are pointed out that that this could be a negative. Well, I don't see it that way at all. Firstly, JD has great relationships with all the brands and that's 73 will come down over time as JD introduces those relationships. Inhibit And secondly, this isn't just about the short term. This is long term and we've all seen this film before. Nike will come back and come back stronger. So we're not concerned about that. That slight reliance on Nike products, it'll come down anyway. A little bit more on the on habits, the supply chain very strong. One of the, the key factors here in the acquisition was, was the, was the back office and the supply chain here, the DC as you can see, uh, not fully automated, but they don't want to go down that road, but, but certainly very efficient. They've got 1200 stores. There's capacity we believe for more than 1500. But I think what will happen here is over time, you'll probably see a bit of a reconfiguration of the US supply chain. At the moment you've got Indianapolis towards the north, you've got details DC, Baltimore area on the on the east, you've got this in Birmingham in the Deep South and then you've got detours. Sorry, you've got Shoe Palace over on the West Coast in San Jose. Now shoe places got stores in Florida. For example, why would you have a lorry trekking all the way from from California to Florida when you're virtually driving past the front door of one of your. Co companies, distribution center. So I think we'll see a reconfiguration and there could be potential for efficiencies and cost savings out of that, but we will see from that perspective. But more on the stores, as I say, there's about 1200 of them, 1000 inhibit 200 a city. We're going to start with city gear. They average about 5000 square feet. As I say, predominantly footwear, but let's have a look at what we found from here. Outside city gear. This is a mule location, it's about 3035. The majority of the stories are our neighbourhood, but this is a concept that you'll probably see in in most. So it doesn't differ too much or once it's other lots of Nikes you'd expect, but really a lot of talk about how you build relationships within the community. Really sort of shopping the look, the toe to head as as as actually was patented with trademarks by city gear years ago. Just that sort of shopping experience. Lots of high staff density here. Really, I really sort of funky. Gee, sort of feel to the product mix here, quite a bit of denim actually surprised me a little bit to see from this picture. Also very keen to emphasise the the ability to order stuff that's not in stock and have that delivered for pick up or delivery, free delivery the next day. So a few things here that others can't offer on a sort of basic level, but it's the product range and it's those relationships with with the with the community that are key here. Now this is another city gear store, This is a shopping centre. In Birmingham, they actually got 23 stores in the Birmingham area, noticeable use of technology here, noticeable good power merchandising. This is a recently refitted store, so this is not surprisingly looking pretty good as we look further through the store. Lots of good sort of visual merchandising, etcetera, Good racking there. They spend about $250,000 on a refit, about half a million on a new store and that looks like money. Was sent to us, so this would be one of the better city gears we would think. Well, the day's getting hotter. I'm getting reader. This is a Hibbert neighbourhood store. This would class as a more athletic, more fashion store. They do classify them into athletic or fashion. This has got some athletic sort of hardware, some equipment here, but mostly fashion. Good range, good range of of Nike product here, but lots of apparel probably above the group average in here and and lots of decent merchandising. I think there's bits and bobs that that JD. Probably educate a little bit, but a good store and yeah, this would be sort of a classic sized athletic toy fashion store. So we would describe this very much as a deal in line with strategy, some very good stores reinforcing those links with with neighbourhoods, good DC and and potential to consolidate the the distribution network or or rejig it. What will JD bring to the picture will of course it will bring those relationships with brands that I talked about earlier. It'll bring best practice, it'll bring Birch editing skills, it'll bring plenty to the table.