Strategic Analysis of the company

Running head: FINANCIAL ANALYSIS
Financial Analysis
Name of the Student:
Name of the University:
Author’s Note:

FINANCIAL ANALYSIS1
Table of Contents
Introduction......................................................................................................................................2
Discussion and Analysis..................................................................................................................2
Company Overview.....................................................................................................................2
Industry Performance, Economic Outlook and Competitive Analysis........................................3
UK Clothing Industry Analysis...............................................................................................3
Economic Outlook...................................................................................................................5
Competitive Analysis...............................................................................................................7
Strategic Appraisal.......................................................................................................................7
Decomposition of ROCE...........................................................................................................10
Valuation....................................................................................................................................11
Discounted Cash Flow Method.................................................................................................11
Weighted Average Cost of Capital........................................................................................12
Asset Based Valuation...............................................................................................................13
Market Based Valuation............................................................................................................13
Dividend Yield...........................................................................................................................13
Dividend Discount Model..........................................................................................................14
Comparison of Valuation...........................................................................................................15
Conclusion & Recommendations..................................................................................................16
References......................................................................................................................................17

FINANCIAL ANALYSIS2
Introduction
The financial analysis has been done for the JD Sports company in which the analysis has
been done based on the financial as well as business performance shown by the company. The
analysis has been done especially for the company by analysing the industry in which the
company performs, its financial performance and the economic outlook that the company carries
from a business perspective. Strategic Analysis of the company has been well done with the help
of the SWOT Analysis for the company which included both the internal as well as some of the
external features that are related to the company. The analysis of the ROCE has been well down
with the help of the DuPont Analysis in which the various components and factors like Net Profit
Margin. Return on Assets and Financial Leverage of the company. Valuation of the company
alongside has been well performed with the help of the Discounted Cash Flow Valuation,
Dividend Yield Valuation and Multiple Based Valuation for the company. Further the models
used in the analysis has been well compared based on the features and factors that are included in
the analysis of each of the model included.
Discussion and Analysis
Company Overview
JD Sports Fashion PLC was well established in the year 1981 whereby the company has
established as a sports-fashion retail company that is based in Bury, Lancashire, England which
is having its fleet of shops throughout the United Kingdom, Europe, United States, Asia and
Australia. The product line and categories of the company are well expanded into clothing,

FINANCIAL ANALYSIS3
sportswear and sports accessories rather been confined to a single product. Diversification in the
product line offered is well undertaken by the management of the company. The company has a
sound number of employee base to well support its daily operations which are around 32,125
employees which helps the company in well operating the daily business activities of the
company. Financial risk exposure of the company in terms of debt to equity ratio also has been
comparatively low for the company which in turn has allowed the management of the company
well manage the financial risk of the company (JD Sports Fashion PLC Financial Statements -
WSJ 2020). The financial performance of the company and the business activities of the
company has been growing constantly whether it has been in the field of operating income or in
the field of asset turnover that has been generated by the company.
Industry Performance, Economic Outlook and Competitive Analysis
UK Clothing Industry Analysis
The clothing industry is the biggest business in the UK Industry and primarily accounts
for majority of the exports that are done from the country. The wool trade industry of the UK
once accounted for almost 80% of the exports from the British Isles. The fashion industry of the
UK is currently worth around £26 Billion and gives jobs to around 800,000 people in the UK,
which makes the industry not only the largest industry but also a lucrative one (Apparel market
in the UK 2020). The apparel and clothing market in the UK has shown a steady growth in the
last seven years and whereby it was well expected that by the year 2020 to set the industry
market value at around 66.0 Billion Euro. In addition to the market value the annual expenditure
that is seen on the clothing, the sales volume has also shown a tremendous growth which has
reached to around 58.3 Billion Pounds. At the same time it is important to note that the majority
of the cloth purchase is dominated by women’s garments which has well accounted for double