JD Sports’ Shares Drop As Retailer Predicts Annual Sales Of £1 Billion

Shares in JD Sports Fashion dropped on Wednesday as it released full-year financials and forecast sales to hit new highs above £1 billion.

At 162.2p per share the FTSE 100 retailer was down almost 5% on the day.

Revenues at the sportswear giant jumped 18% in the 12 months to January, to £10.1 billion. On an organic basis sales were up 12% year on year.

As a result, pre-tax profit at the FTSE firm increased 5% last year to hit record levels of £991.4 million. This was despite a £550.5 million charge related to the clean up of prior acquisitions.

Gross profit margin dropped to 47.8% from 49.1% in financial 2023. JD said that this reflected “the return to normalised stock levels in North America through the second half of the period leading to the return of some promotional activity.”

Profits Tipped To Break £1 Billion

JD Sports said that sales have continued rising by double-digit percentages in recent months. Organic revenues rose more than 15% at stable exchange rates during the first 13 weeks of financial 2024.

While JD acknowledged the threat posed by macroeconomic and geopolitical headwinds, it said it expected pre-tax profits to reach new heights above £1 billion for the first time this year. It predicted full-year profits of £1.03 billion, in line with market consensus.

The company has benefitted from booming demand for leisurewear as consumers opt for comfortable, versatile, and (in some cases) cheaper apparel in the post-pandemic environment.

“Excellent Progress”

JD Sports chairman Andrew Higginson described the last financial year as “another period of excellent progress” for the company.

He said that trading had strengthened significantly during the second half and especially in North America as supply chain problems eased.

Higginson added that “we are pleased with the positive progress that we are making in North America and it is our intention to accelerate the rollout of JD in this important market as we believe it will deliver long term sustainable benefits.”

JD has said it plans to open between 250 and 350 new stores across its territories each year. It currently has around 3,400 on its books spread across Europe, North America and Asia.

This month the business also started takeover negotiations with French sportswear chain Courir to boost its European footprint.

“Raced Ahead”

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said that “JD Sports has raced ahead as the demand for the latest shoes and athleisure-wear shows little sign of abating.”

She noted that “brand power is showing little sign of losing its prowess on the retail track with a pair of the new must-have trainers still proving a huge draw, despite pressures on budgets.”

Russell Pointon, director of consumer at Edison Group, said that the retailer’s full-year statement “demonstrates a durability during what has been a trying financial climate.” He said that JD’s brand awareness and high store base have provided advantages in a difficult market.

Pointon added that “JD’s continued expansion in both the UK and globally will help to drive this vital brand awareness and drive the group towards its projections of roughly 4% growth [this year].”