JD Sports profits rise; sees FY results at mid-point of expectations

Sportswear retailer JD Sports defied the high street gloom on Tuesday as it posted a jump in interim pre-tax profit and said it expects full-year results to come in at the mid-point of expectations.

In the 26 weeks to 3 August, pre-tax profit rose 6.6% to £129.9m on revenue of £2.7bn, up 47% on the same period a year ago. The global sports business saw like-for-like growth of 12%, including growth of more than 10% in the core UK and Ireland segment.

During the half, the company added 23 new stores across mainland Europe and seven in the Asia Pacific region. In addition, it now has six stores trading in the US, along with a trading website.

JD said the performance from Finish Line in the US was "encouraging".

Executive chairman Peter Cowgill said: "Against a backdrop of widely reported retail challenges in the UK, it is extremely encouraging that JD has delivered like for like sales growth of more than 10% with an improved conversion reflecting consumers' increasingly positive reaction to our elevated multichannel proposition where a unique and constantly evolving sports and fashion premium brand offer is presented in a vibrant retail theatre with innovative digital technology."

JD said that notwithstanding ongoing Brexit uncertainty it is confident that it would have been on track to deliver headline pre-tax profit for the full year at the top end of market expectations of £402m to £424m, without the impact from the transition to IFRS 16. However, after adjusting for that impact, it expects to deliver results at the mid-point of expectations.

"We remain encouraged by our prospects for further growth," said Cowgill.

JD Sports said it was "very aware" of the financial benefit other retailers appear to get when they downsize their estates. It said that while it currently has no plans to fundamentally alter the size of its UK store network, it continues "to seek fairness and flexibility" in the terms of its leases.

At 1120 BST, the shares were up 6% at 670.40p.

Russ Mould, investment director at AJ Bell, said: "JD Sports is proof that the best-run retail businesses still have a chance of making big money in a difficult market.

"It appears that JD’s latest sales boost has been helped by getting more interested customers to open their wallets and actually buy items rather than simply browse, as per the reference to having ‘improved conversion’.

"Now that it has made a massive success of the UK market, JD’s story is now one of international roll-out. Europe is already off to the races with the company deciding to increase the physical size of new stores, showing confidence that consumers like its offering.

"Asia Pacific’s growth is being held back by property availability but operations in the US are slowly expanding."