28th Mar 2022 12:45
(Alliance News) - JD Sports Fashion PLC should see product availability pressures ease over the coming weeks, analysts at RBC commented on Monday.
The retailer benefits from its strong relationship with sports apparel brands such as Nike Inc, RBC added.
The investment bank rates the stock at 'outperform'. It has a 250 pence price target. JD Sports shares were 1.4% higher at 152.25p each in London on Monday afternoon, meaning there is more than 60% upside implied in the RBC target.
"We think that JD Sports should prove to be one of the more resilient models in the sector this year, given its strong brand relationships, and its appeal to younger shoppers, for whom sports fashion is a high priority purchase," RBC explained.
Some of the concerns the market has for retailers such as JD Sports surround the direct-to-consumer offerings from major sports apparel brands. Aside from distributing products to retailers, Nike, Adidas AG and other sportswear makers also sell their own goods directly to consumers.
On JD Sports, RBC said these worries are "overdone".
"Our survey work in the past has shown that, outside of China, consumers tend to prefer to shop in a multi-brand environment. We believe that this should favour JD Sports, which can offer consumers a wide range of options," RBC said.
Another more near-term worry for JD Sports relates to product availability. RBC expects uncertainty of product availability to ease in May.
"We think JD's product flow, for example key Nike lines like Air Force 1s, should improve after Easter, given the lag from Vietnam factories reopening. It should be much less affected by apparel supply disruption in China, as this is easier to switch given less technical componentry," RBC added.
By Eric Cunha; [email protected]
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