JD Sports expects full-year profits to beat market expectations following strong consumer demand and improved trading performance over the Black Friday and Christmas periods.
The group is confident its headline profits before tax for the full year to 29 January 2022 will reach at least £875m, ahead of current estimates of £810m.
The sport-fashion retailer is riding high from continued enthusiasm in the market for designer trainers, recognising the wave of interest at an early stage, which has not evaporated despite the pandemic and increased time indoors.
Total revenues for the twenty-two week period up to New Year in the group’s like for like businesses were more than 10 per cent ahead of the same period in 2020, while gross margins for the second half are in line with the prior year.
The company also recognises it has benefitted from the fiscal stimulus in the United States in the first half of the year, which it estimates may have have contributed up to £100m to its results.
Pointing to potential headwinds, JD Sports notes the ongoing challenges with operational restrictions from the Covid-19 pandemic across Europe and Southeast Asia, combined with short-term supply issues with key brands.
Provided no further trading restrictions are imposed on its biggest markets – the UK and North America- the group forecasts that headline profit before tax for the full year to 28 January 2023 will be in line with the current year.
This is ahead of current market expectations for the 2023 financial year.
Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown, praised the company’s performance.
She said: “JD Sports has scored a Christmas cracker on a shopping pitch full of obstacles. Despite the supply chain crunch hitting some brands, a growing income squeeze and fears about the spread of omicron, it’s still notched up a stellar run.”
Looking at its future performance, Streeter argued economic conditions will be more challenging for JD Sports. Nevertheless, she remained optimistic the brand would continue to deliver a strong performance in the market.
The analyst explained: “But ahead, it won’t be so easy to score an easy goal of growth of this level given that the effects of that stimulus boost are fading away and higher national insurance contributions in the UK will have to be absorbed. Adding into the challenging mix are ongoing supply chains issues constraining the availability of some products, but the group has already shown its nimble performance in navigating that particular headwind. With sports and fashion fans showing a willingness to queue around the block to get their hands on the latest styles, sales should remain buoyant even as belts are tightened elsewhere.’’
It will provide its next update on trading in the group’s preliminary results for the year ending 29 January 2022, which will be published on 12 April 2022.
Peter Cowgill, executive chairman, said: “The commitment of our colleagues is crucial to our success and I would like to thank everyone in our various businesses for their significant contribution in delivering this outstanding performance.”
JD Sports’ encouraging performance will reassure investors after its attempts to takeover shoe specialists Footasylum were rejected by the Competition and Markets Authority (CMA), which ordered it to sell all 65 of its stores.
Frasers Group chairman and retail rival Mike Ashley has reportedly since offered to buy Footasylum from JD Sports.