JD Sports On Track For Record Year Despite Softening Of U.S. Sales

Despite softening sales in North America and Canada, U.K. based sportswear retailer JD Sports has maintained annual guidance that full-year profits will pass $1.27 billion.

And although sales growth slowed in May of this year, that means it will break through the landmark £1 billion mark in local currency for the year to Feb. 3 2024.

The group said positive trading in all regions through May and overall growth in organic sales of around 8%, compared with 15% in the first three months of the year, meant it was still on track to achieve milestone profits.

“This moderation in the growth was in line with management expectations and reflects tougher comparatives in the prior year as the supply chain normalized and the availability of product improved,” the company said in its update.

While its U.K., Europe and Asia Pacific businesses all performed well, this was partly offset by operations in North America which were “experiencing some softening in trade consistent with other businesses in the sector” the company added in its update.

However, it insisted that there would be no need for price cutting in the U.S. as it had been managing its inventory accordingly.

“Inventories in our businesses in North America are at normal levels and we will be no more promotional than we need to be to remain competitive,” JD Sports said.

JD Sports Store Growth

Consistent with its ‘JD First’ and global growth strategy, the company said that it had opened a net additional 32 JD stores in the first four months of 2023 and was on schedule to open more than 150 stores over the course of the year as its worldwide expansion strategy continues.

JD Sports posted a record pre-tax profit and exceptional items of $1.26 billion in the year to Jan. 28, ahead of guidance and 4.1% up from profits of $1.21 billion a year earlier.

Trading from about 3,400 stores in 32 countries, JD has been expanding rapidly, boosted by the appetite from young adult shoppers who are typically less impacted by rising living costs and who buy from JD for special access to powerhouse brands Nike
NKE
and Adidas.

The retailer announced in September 2022 that JD was to become Nike’s first European retail partner for its ‘connected partnership’, designed to give customers access to an additional range of member-exclusive Nike products and experiences.

JD Sports Shares Slip

The U.S. warning sent shares in the FTSE 100-listed company down around 4.5% in morning trading in London but Peel Hunt analysts said the stock was undervalued. Shares in JD are up just shy of 10% in the year to date and around 17.5% over the past 12 months.

“The U.S. performance will probably catch the headlines but Europe and the U.K. are in rude health and have picked up any bottom-line slack,” the analysts said.

In April, JD Sports appointed Michael Armstrong as Global Managing Director of JD, a newly-created role to help further drive growth.

He reports into Group Chief Executive Officer Régis Schultz, overseeing the strategic direction of the JD brand, its operations, business development and growth of the JD fascia globally.