JD Sports outpaces weak UK high street with profit rise

Company says sales in core UK market ‘extremely encouraging’

 

JD Sports, Britain’s biggest sportswear retailer, reported higher first-half pretax profit on Tuesday, helped by more demand for gym clothing and premium branded fashion.

JD has successfully targeted younger consumers who are driving the trend for athleisure - where sports clothes have become more acceptable at work, school and for going out socially.

The company, which acquired US retailer Finish Line last year and agreed to buy British rival Footasylum in April, said pretax profit rose 6.6 per cent to £129.9 million for the six months to August 3rd.

The owner of the Footpatrol and Cloggs brands reported a 47 per cent rise in group revenue to £2.72 billion. “Against a backdrop of widely reported retail challenges in the UK, it is extremely encouraging that JD has delivered like for like sales growth of more than 10 per cent,” executive chairman Peter Cowgill said. Shares in the group rose 5 per cent in early deals to 663 pence, topping the FSTE 100 index of leading British companies. Like-for-like sales in its global sports fashion businesses rose 12 per cent , it said, with growth of more than 10% in its main UK and Ireland outlets.

Analysts at broker Peel Hunt upgraded their target price for the stock to 700 pence, saying JD’s performance in the period had been “nothing short of stellar, especially in the core UK market”. “JD’s attractiveness to shoppers and suppliers (and investors) is at an all-time high and we see little chance of this changing”, they said.

JD Sports’ focus on athleisure has helped it outperform a struggling British retail sector, reflecting more people shopping online, higher costs and weakening consumer spending. Cowgill said “notwithstanding the ongoing uncertainty with regards to Brexit”, the company was confident it was on track to deliver headline profit before tax for the full year at the top end of market expectations, which currently range from £402 million to £424 million.

However, the rise would be constrained by a change in accounting standards, which meant forecast profit at the mid-point of expectations. - Reuters