31st May 2024 11:40
(Alliance News) - JD Sports Fashion PLC on Friday said that unseasonably mild weather impacted winter sales, as AJ Bell's Jack Patterson pointed out the company had to deal with a youthful target demographic that grapples with the ongoing cost of living crisis.
The Lancashire, England-based sports-fashion retail company reported that adjusted pretax profit in the 52 weeks to January 27 fell 8.0% to GBP912.4 million compared to GBP991.4 million a year prior.
Despite this, JD Sports proposed a final dividend of 0.6 pence per share, increasing its total payout by 13% to 0.9p from 0.8p a year prior.
In the 52 weeks ended January 27, 2024, revenue was up 2.7% to GBP10.40 billion from GBP10.13 billion a year prior. JD sports highlighted "unseasonably mild weather" affected the sales of winter apparel and accessories, as well as slower camping sales.
Meanwhile in the first quarter of financial year 2025, the company's like-for-like sales declined 0.7%, driven by a 6.4% slide in the UK. In Europe, sales were up 1.6%, in North America they climbed 2.0% but in Asia Pacific they contracted by 0.1%.
AJ Bells Jack Patterson said: "A dip in full-year profit despite higher revenue reflects the cost challenges facing the business and a drop in like-for-like sales in the new financial year, which started at the end of January, is sticking in the craw of investors."
On a statutory basis, pretax profit jumped 67% in the 53 weeks ended February 3 to GBP811.2 million from GBP486.7 million in the 52 weeks ended January 28, 2023.
AJ Bell's Patterson added: "One of UK retail’s biggest success stories, JD Sports, has found life a bit trickier in recent years and not just thanks to the pandemic. While its youthful demographic, with some of its customers still living at home, may not have been as immediately impacted by the cost-of-living crisis, ultimately there have been limits on their capacity and appetite to drop hundreds of pounds on the latest set of must-have trainers."
UBS researchers meanwhile noted the "cautious tone from Luxury and Sportswear peers on the UK."
JD Sports shares fell 7.2% to 124.16 pence each on Friday morning in London. UBS has a price target of 178p, about 43% ahead of the current share price.
"Despite recent outperformance, JD Sports' valuation is still close to the bottom of its 10-year range, creating an attractive buying opportunity, in our view, given improving near-term trends and a better-than-encouraging medium-term growth outlook," the UBS analysts said.
Noting that in the 13 weeks to May 4, trading was in line with the company's expectations, JD Sports Chief Executive Officer Regis Schultz said: "I am confident that the global sportswear market, and in particular, the athleisure space within it, has many years of structural growth ahead of it, with favourable trends like casualisation and active lifestyles continuing."
By Tom Budszus, Alliance News slot editor
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