JD Sports upbeat as sales rise, US fiscal stimulus was key
JD Sports Fashion has enjoyed strong trading since late summer with the retail giant saying Wednesday that total revenues for the 22 weeks to January 1 were up 10%. It also upgraded its profit forecast for the full year following the good trading in the bulk of its second half.
The company owns a diverse selection of sports, outdoor and fashion retailers around the world, including the JD Sports chain, Chausport, Tessuti, Shoe Palace, Size?, Finish Line, and Go Outdoors, among others.
It saw “an equally positive performance across the Black Friday and Christmas period” while the 22 weeks had encouraging gross margins that were in line with the previous year.
The company said it was “another extremely robust performance”, given the challenges of the Covid-19 pandemic, “including the disruption of the supply chain operations of some of our key brand partners”.
It added that the “sustained positive nature of consumer demand through the second half to date means that we are now confident that the group headline profit before tax for the full year to 29 January 2022 will be ahead of current market expectations, which average £810 million”.
It’s expecting a figure of around £875 million, helped by the impact of fiscal stimulus in the US in the first half of the year that “may have contributed up to £100 million to this result”.
It’s aware of the ongoing challenges to its business, such as “operational restrictions from the pandemic across Europe and Southeast Asia combined with the well-publicised short-term constraint in the supply of inventory from certain brands”. However, it said that its “buying and merchandising capabilities, its breadth in brands and product assortment and a deep multichannel connection with the consumer” mean it’s “well placed to manage these challenges”.
But looking further ahead to the year that ends in January 2023, while it remains cautiously upbeat, it’s not expecting profits to leap ahead. It said that assuming no further trading restrictions in its “most material markets of the UK and North America”, plus absorbing the additional statutory costs of employment in the UK and reflecting the benefit that accrued from the financial stimulus in the US in the current year, its best estimate is that group headline pre-tax profit will be in line with this year. However, while no big profits jump is forecast, this new guidance is ahead of current market expectations for the 2023 financial year.
The group’s preliminary results for the current financial year will be published on April 12.
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