JD Sports remains confident of growth prospects

Retailer JD Sports Fashion said it continues to be on track to deliver a full year in line with consensus market expectations, having opened a net 36 shops in its new financial year.

The emphasis of the store estate expansion has been on international development, with 18 new stores to date across Europe and 16 in the Asia Pacific region, in Malaysia, Australia and first JD fascia stores in both South Korea and Singapore.

"Overall, we remain encouraged about the progress that we are making internationally and, following the recent acquisition of the Finish Line business, are excited by the opportunity ahead of us in the United States," said executive chairman Peter Cowgill ahead of the group's annual shareholder meeting.

The group will announce interim results for the period to 4 August on 11 September, but before then will host a capital markets day in Manchester on 4 July, where there will be talks from heads of marketing, multichannel, buying, property and supply chain and other departments, together with a visit to the warehouse facility in Rochdale.

The Finish Line acquisition has been hailed by analysts, including at Peel Hunt, which a day earlier highlighted material upside potential from retailer JD Sports following the "transformational" deal.

The broker said that, in a world where brands are increasingly going for "direct to consumer" sales models, relationships with players like Nike and Adidas aren't just important, they are "life and death", saying JD had bought a business that could generate much higher sales and EBIT densities if it improved some retail basics.

Shore Capital analyst Greg Lawless said it was "a reassuring start to the year but 2018/19 is a big year for the group" following the Finish Line acquisition.

He noted that JD’s shares have had a good run of late advancing 13% over the last month and 25% over the last three months, to trade on a forward one year P/E multiple of 15.7 and an EV/EBITDA multiple of 10.3x.

"JD remains a tightly managed company with good cost and stock control and strong cash generation. This is a confident management team with strong momentum across the business who are starting to harness the international opportunity."