11th Jan 2023 11:08
(Alliance News) - JD Sports Fashion PLC reported strong trading over the key Christmas shopping period, even as the athleisure retailer looks over its shoulder at the direct-to-consumer offerings of the major sports apparel brands that it sells.
Shares in the company were 6.5% higher at 150.00 pence each in London on Wednesday morning.
JD Sports said revenue growth quickened in the run-up to Christmas. It now predicts annual profit at the top end of market expectations.
JD Sports said organic revenue in the six weeks to December 31 jumped more than 20% from a year before. In the 22 weeks to the end of December, organic revenue rose more than 10% annually. Organic annual growth picked up from 5% in the first-half.
JD Sports now expects pretax profit before exceptional items for the financial year ending January 28 at the top end of a GBP933 million and GBP985 million market consensus range. The very top of that range represents growth of 4.0% from GBP947.2 million the year prior.
It expects profit to spike to around the GBP1 billion mark in the next financial year.
Swiss bank UBS said investors expect JD Sports to give "conservative" guidance, so the GBP1 billion prediction will be "reassuring".
By geography, JD Sports said trading in North America recovered. First-half "momentum" was maintained in the UK & Ireland, Europe and Asia Pacific.
Third Bridge retail analyst Zainab Atiyyah commented: "Our experts expect JD Sports margins to remain under pressure for some time as customers forgo discretionary purchases and trade down, more promotional activities are required."
"This is a massive opportunity for JD Sports to leverage their own brands and build their value proposition."
One concern for investors in retailers such as JD Sports is about the direct-to-consumer offerings from major sports apparel brands. Aside from distributing products to retailers, Nike Inc, Adidas AG and other sportswear makers also sell their own goods directly to consumers.
While JD may be keeping a close eye on Adidas and Nike, Atiyyah added, though the FTSE 100 listing also should be keeping tabs on high street peer Frasers Group PLC.
"Management at JD Sports will be closely watching how Adidas and Nike are growing their direct-to-consumer channels. Our experts are watching the Frasers Group as they rapidly improve their multi-channel presence. Flannels and Sports Direct are also important competitors for the JD portfolio," Atiyyah added.
By Eric Cunha, Alliance News news editor
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