JD on track for £1billion profits

JD Sports shareholders will be told at its AGM today that trading in the first three months of the year have been positive and the company is on track to deliver £1.04 billion of profits.

However, the board described expected sales growth of 8% as “moderation” and noted “tougher comparatives” to last year as the supply chain normalised and the availability of product improved with a “some softening in trade”.

The AGM will also be told that headline profit before tax and adjusted items for the year end 3 February 2024 will be in line with the current average consensus expectations of £1.04 billion. 

Phasing of the profit in the current year will reflect a normalised trading pattern with approximately 35% of profits generated in the first half.

The statement is a vindication of the strategy of new CEO Régis Schultz and the focus on key brands, the AGM will be told.

“Consistent with its ‘JD First’ and global growth strategy, the Group opened a net additional 32 JD stores in the first four months of the year and is on track to open more than 150 stores for the JD fascia over the course of the year in line with the targets set out in the Group’s Capital Market Event in February. 

“Elsewhere, the Group still anticipates that the proposed acquisition of the complementary Courir business in Europe, which represents the Group’s first acquisitive steps in fulfilling the growth ambitions of the business in underpenetrated markets, will formally close later in the year. 

“The mandatory consultation process with the Courir works council has now completed with good progress being made on the preparation of the mandatory anti-trust submission.”

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “Terms like ‘softening in trade’ and ‘moderation in growth’ in JD Sports’ latest update go to show that even the most successful retail businesses can go through bad patches.

“The trainers and athleisure seller recently got the market excited that it expects to exceed £1bn in pre-tax profit this financial year, and it is sticking with that guidance, despite pockets of weakness in its business.

“We continue to see many trainers from the likes of Nike sell out as soon as they go on sale, creating a buzz about the products which makes consumers want them even more. Many people see trainers as collectibles and they are happy to pay high prices in the belief they could be worth even more in the future.

“Yet if the recession clouds darken over the economy, particularly in North America, then there is a risk that the demand dynamic could change because of affordability factors.”