Challenges linked to the implementation of a new “flexible supply chain model” had a significant impact on stock availability at JD Sports’ own brand Go Outdoors.
Go Outdoors had previously used a replenishment model where branded suppliers delivered goods directly to stores, resulting in an “inflexible supply chain with weak product availability in stores at times of high consumer demand”, said Peter Cowgill, executive chairman at JD Sports Fashion in the firm’s half-year report.
In February 2019, the retailer moved stock to a facility in Middlewich, Cheshire, where it began replenishing stock and fulfilling orders.
Go Outdoors was also migrated onto JD Sports Group’s IT platforms.
Cowgill said the retailer had experienced a number of challenges with changing processes, which had a “significant impact on availability, replenishment to stores and online fulfilment in the key trading period of May and June”.
Cowgill maintained his belief that the new flexible supply chain model, which includes greater control over replenishment, would bring longer term financial benefits to Go Outdoors.
The report said costs of £4.4m were associated with the integration of IT systems, warehousing and other infrastructure connected with Go Outdoors, which JD Sports acquired in 2017.
Cowgill confirmed while the majority of the supply chain issues had been resolved, the transfer of Blacks stock to Middlewich from its current facility in Kingsway, Rochdale, would be delayed until early 2020 in order to “allow time for operations in the new facility to further stabilise”. The move was due to take place this year.
“We remain convinced that greater integration of the outdoor businesses, with Blacks and Go Outdoors having access to one pool of stock with common merchandising systems, will also provide the most robust and effective platform for the long-term development of our Outdoor businesses,” he said.
Works to install automation equipment at the Kingsway warehouse also caused disruption to availability at JD Sports, “necessitating further frequent changes in operating procedures and additional levels of manual process”, Cowgill added.
“We have now been able to start reducing the level of manual working as we bring the site into operational use although, as a contingency, we will retain an element of this additional trained labour through the peak trading period.”
JD Sports reported strong trading figures across the business. Revenue for the first half of 2019 until 3 August totalled £2.72bn, up from £1.85bn in the first half of 2018. Profit before tax increased to £129.9m from £121.9m last year.
☛ Want to stay up to date with the news? Sign up to our daily bulletin.