JD Sports raises profit forecast to £875m

Bury-based FTSE 100 retailer JD Sports Fashion Plc on Wednesday raised its annual profit forecast for the second time in four months.

JD Sports said it expects headline pretax profit of at least £875 million for the year to January 29, ahead of current market expectations of £810 million.

“JD Sports Fashion Plc today announces an update on performance following the Christmas trading period,” said the firm in a stock exchange statement.

“Total revenues for the twenty-two week period to 1 January 2022 in the group’s like for like businesses were more than 10% ahead of the same period in 2020 with an equally positive performance across the Black Friday and Christmas period.

“We are also encouraged that gross margins for the second half are in line with the prior year.

“Given the challenges that have prevailed from the COVID-19 pandemic, including the disruption of the supply chain operations of some of our key brand partners, this is another extremely robust performance which further demonstrates the strength of the relationship that our fascias have with their consumers, the agility of our multichannel operations, the strength of our operational infrastructure and the resilience of our colleagues.

“The sustained positive nature of consumer demand through the second half to date means that we are now confident that the group headline profit before tax for the full year to 29 January 2022 will be ahead of current market expectations, which average £810 million.

“It is now anticipated that the outturn for the full year will be at least £875 million.

“Management recognise the benefit from the fiscal stimulus in the United States in the first half of the year and would estimate that this may have contributed up to £100 million to this result.

“Looking ahead, management are cognisant of the ongoing challenges with operational restrictions from the COVID-19 pandemic across Europe and Southeast Asia combined with the well-publicised short-term constraint in the supply of inventory from certain brands.

“However, the group, with its buying and merchandising capabilities, its breadth in brands and product assortment and a deep multichannel connection with the consumer, is well placed to manage these challenges.

“At this time, assuming no further trading restrictions in our most material markets of the UK and North America, absorbing the additional statutory costs of employment in the UK and reflecting the benefit that accrued from the financial stimulus in the United States in the current year, our best estimate is that the group headline profit before tax for the full year to 28 January 2023 will be in line with the current year, which is ahead of current market expectations for the 2023 financial year.

“We would expect, however, that the phasing of the profit in the year to 28 January 2023 will revert more to historic norms with approximately 35% to 40% of the annual profit being generated in the first half.

“We intend to provide our next update on trading in the group’s preliminary results for the year ending 29 January 2022 which will be published on 12 April 2022.”