JD Sports share price rockets after pumped up annual figures impress investors

 
Oliver Gill
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JD Sports said it is sitting on over £200m of cash (Source: JD Sports)

Shares in JD Sports soared 12 per cent in morning trading after the firm posted its best-ever financial results and its third consecutive year of double-digit like-for-like growth.

JD Sports' executive chairman hailed 2016 as "another period of very significant progress" and said pre-tax profits have increased 190 per cent over the last three years.

The figures

Revenues rose 31 per cent over the last 12 months to £2.4bn. Gross profit margins (how much JD Sports makes on each product sold as a percentage) were steady at 48.9 per cent, compared with 48.5 per cent last year.

Operating profit was up 55 per cent to £246m and with exceptional item expenses falling this meant the firm generated profit before tax of £238m, up 81 per cent on the prior period.

Read more: JD Sports smashes expectations

Adjusted earnings per share were 19.04p, up from 12.27p but the total dividend increase was more muted, up to 1.55p from 1.48p per share.

Net cash at the year end was £214m, slightly up from this time last year when its coffers contained £209m.

Why it's interesting

JD Sports is growing. It is opening more stores and increasing sales but managing to keep a lid on its cost base, so often the bane of businesses chasing revenue increases.

Last year it opened 54 stores in Europe, a couple in Malaysia, and it is preparing to dip its toe into the Australian market.

The self-titled "King of Trainers" has managed to eke out a decent outdoor business. Blacks and Millets are owned by the firm and it added Go Outdoors to its operations. Gross margins were lower in outdoors (43.7 per cent versus 49.4 per cent) but it is profitable.

Read more: JD Sports hits back at accusations of prison-like working conditions

The outdoor business is about a tenth of the size of the sports fashion business, the main driver of today's performance.

Brexit

Within all the good news was a warning on years to come from executive chairman Peter Cowgill. He signalled cost increases could hamper the firm going forward. He said:

Whilst we must recognise that there are external influences which may impact the latter part of the year, notably inflationary pressures arising from Brexit, the board remains confident in the robustness of the JD Sports proposition and believes that the group is well positioned for further profitable growth.

What the company said

Cowgill added:

"This has been another period of very significant progress for the group. Over a three year period [pre-tax profit] has improved by more than 190 per cent which is an outstanding performance and provides the group with a robust platform for further development.

"The foundation of this success remains our core Sports Fashion fascias where JD's continued strength in its core markets is increasingly being complemented by momentum in our international development, with a net increase of 54 JD Sports stores across mainland Europe during the year."

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