JD Sports is eyeing further international growth after revealing a successful Christmas trading period has put it on track to post profits of almost £1bn.
The Greater Manchester-headquartered retail giant's revenues in its organic retail businesses "strengthened" through the second half of its financial year with total revenue growth for the 22 weeks to December 31, 2022, of more than 10%.
JD Sports added that the performance in these businesses through the Christmas period, both in stores and online, was "particularly impressive" with total revenue growth over the six-week period to December 31, 2022, of more than 20%.
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In a statement issued to the London Stock Exchange, the company said: "We are very encouraged by the performance of our global premium sports fascias.
"Notably, our businesses in North America have, as expected, recovered strongly delivering growth of more than 20% through the second half to date.
"This improvement reflects both the improved availability of product in all of our banners and the positive momentum in the development of the JD fascia with 134 stores now trading as JD across the United States and Canada.
"Elsewhere, our businesses in the 海角视频 and Republic of Ireland, Europe and Asia Pacific have maintained their first half momentum, both in stores and online, which is reassuring and demonstrates the ongoing resilience of our proposition and the enduring strength of our multi-channel consumer engagement."
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JD Sports said that the "positive performance" through the second half to date means that it now expects the headline group profit before tax and exceptional items for the year ended January 28, 2023, will be towards the top end of current published market expectations which range from £933m to £985m.
But the group added that the "ultimate outturn will, however, reflect trading through the remainder of January with the post-Christmas sale period still to take place in some of our most important European markets".
The group also said: "Looking ahead, management are confident that consumers worldwide are more attracted than ever to JD's differentiated proposition with its attention-grabbing theatre in stores, advanced digital technologies, breadth in the range of brands and availability of key styles.
"Management firmly believe that the most significant opportunities lie in the continued international multi-channel development of the group's sports fashion businesses and, consequently, the group will be accelerating its global investment in these businesses through 2023.
"The group also remains committed to enhancing its service to consumers both in stores and online with the programme of works to upgrade the group's operational infrastructure ongoing."
JD Sports added that at this time, assuming current exchange rates, it estimates that the group's headline profit before tax and exceptional items for the full year to February 3, 2024, will be just over £1bn.
Chief executive Régis Schultz said: "The engagement and commitment of our teams through the peak trading period has been phenomenal with many of our stores and websites delivering record sales and JD's market-leading product and retail experience capturing the imagination of customers globally like never before.
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"Our strategic focus on the international and digital expansion of our global premium sports fascias is underpinned by the continued strength of these businesses."
Analysis
Mamta Valechha, equity research analyst at Quilter Cheviot:
"JD Sports provided a strong Christmas trading update this morning, with organic retail sales strengthening in the second half of the year (+10% vs. 5% in the first half), driven by better stock availability. Its trading has come in ahead of expectations thanks to an impressive Christmas period. Both in stores and online did well with total revenue in the six weeks to the end of December up more than 20%.
"The US was the stand out region with sales continuing to recover strongly. The JD conversion programme is on track with 134 JD stores open in North America. Elsewhere in the 海角视频 and Europe, JD has kept their first half momentum in both stores and online despite the macroeconomic backdrop, which is reassuring and demonstrates the ongoing resilience of the premium sportswear sector.
"As a result of a strong second half performance, JD now expects group headline profit for FY23 to be at the top end of current market expectations, though we will have to wait for January trading to settle before getting the final figure. Shares in JD Sports are still at a level where we think the market is underestimating the strong proposition it has to offer in the attractive sportswear sector."
Zainab Atiyyah, retail sector analyst at Third Bridge:
"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.
"Average selling prices across the sector look set to increase in 2023 in response to higher input costs and consumers expecting to pay more.
"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."
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