Jim Armitage: JD Sports shows Mike Ashley how the game should be playedComments Off on Jim Armitage: JD Sports shows Mike Ashley how the game should be played
Peter Cowgill and Mike Ashley: two straight-talking tycoons running major sports retailers, but what a difference between them.
Cowgill’s JD Sports has no zero hours contracts, directly employs more than 70% of its warehouse staff rather than using agencies and has a relatively committed, loyal workforce. Sports Direct relies massively on badly-treated agency workers, remains a fan of zero hours contracts and, perhaps partly as a result, has alleged drug problems at its Shirebrook depot.
Where Sports Direct has in the past had a fractious relationship with the big brands over how it piles up their wares, JD works with them hand in glove. That means offering concessions in store to the likes of Adidas and Nike, giving them the power to create what retail types call “theatre” around their products.
That could be displaying the virtues of the latest materials technology they’re peddling, or making the most of whichever celebrity they’re paying to promote their kit. It may be marketing claptrap, but it works; JD sells its goods at a premium to Sports Direct, and is rewarded with exclusive product launches that keep the punters coming back.
The trading pattern is different, too: JD on Tuesday announced its earnings were up 66%, while Sports Direct just issued a profit warning.
As a result of all this, there’s another big difference, which poses a dilemma for investors. JD shares have shot up 250% in the past two years and now trade on a price-earnings ratio of 26.6. Sports Direct’s have fallen 54% and have a PE of 6.9.
Betting on a turnaround story like Sports Direct is a gamble, but, for all the quality on offer at JD Sports, if I were looking for a shares bargain, I know where I’d go.
Music’s on song
Fathers in their forties should beware of pronouncing on pop, but chatting to the new MD at Chrysalis, it seems London’s music industry isn’t in as grim a state as I thought. What with the major record labels still figuring out how best to profit from digital streaming, and Universal seemingly shifting its powerbase from London to the US, it looked like this city was on the slide.
But not according to John Dyer, who was part of the team at the Domino label who signed Arctic Monkeys.
He says independent companies like Chrysalis have great opportunities as the majors scale back, leaving more agile souls like him to pick up undiscovered bands and lucrative niche businesses.
To paraphrase The Specials — one of Chrysalis’s roster — this town might not be coming like a ghost town for the music biz after all.