JD Sports Fashion is making its first move into Mexico, striking a franchise deal to plant its athleisure brand in one of Latin America's biggest consumer markets.
The FTSE 100 sportswear retailer has partnered with Grupo Axo, described as Mexico's leading multi-brand omnichannel distributor, to run 140 JD stores from 2027 alongside an online business.
Axo will use its existing shops and property, with JD supplying the brand, its own-label ranges and exclusive lines.
Broker Shore Capital sees it as a more cautious route into a new market than JD's recent taste for acquisitions.
The retailer has expanded in North America by buying rivals such as Hibbett and Courir, an approach that ate up capital.
By contrast, a franchise model should prove far lighter on cash and quicker to pay back, according to Shore Capital analysts David Hughes and Clive Black.
The prize is a young and growing market, with roughly 40% of Mexico's 130 million people aged under 25.
The country's activewear market is already worth an estimated $6.5 billion and is forecast to top $10 billion by 2034.
Initially, the tie-up looks like a rebranding of Axo's existing sites, though the better performers could later be enlarged into JD's flagship format.
Store openings begin early next year, so there will be no impact on the current financial year, but the broker expects a contribution to profit and returns thereafter.
Shore Capital kept a hold rating and 75p price target, against a share price of 74p that has fallen around 20% over the past year.
It called the valuation undemanding, at less than seven times forecast earnings, and said the risk to its profit forecasts from 2028 now looked skewed to the upside.
More clarity should come on 23 September, when JD publishes interim results.
