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JD Sports sees FY profit ‘significantly’ ahead of market expectations

(Sharecast News) – JD Sports Fashion said on Monday that it is confident headline pre-tax profit for the year to 30 January will be “significantly” ahead of current market expectations of around £295m as demand has remained robust throughout the second half, including the key months of November and December.
The retailer said it expects the outturn for the full-year to be at least £400m.

JD said revenues for the 22 weeks to 2 January 2021 in its like-for-like businesses were more than 5% ahead of the prior year as consumers “readily switched” between physical and digital channels.

“Looking ahead, it is clear that operational restrictions from the Covid-19 pandemic will also be a material factor through at least the first quarter of the year to 29 January 2022. Whilst we are confident that we have the proposition to continue to attract consumers throughout this period, the process to scale down activity in stores and scale up the digital channels, often at extremely short notice, presents significant challenges.

“Under normal circumstances, we would be confident that the results for the forthcoming year to 29 January 2022 would show a strong improvement on the current year.”

However, JD said that given the ongoing uncertain outlook, with stores in the UK likely to be closed until at least Easter and closures in other countries possible at any time, its best estimate is for group headline pre-tax profit for the full year to 29 January 2022 to be 5% to 10% ahead of the current year.

At 0930 GMT, the shares were up 4.5% at 888.86p.

Russ Mould, investment director at AJ Bell, said the update does not read like there is a global pandemic going on.

“To guide for profit ahead of expectations despite the massive disruption resulting from Covid is a mammoth achievement,” he said. “It also demonstrates the fact that retail spending itself has held up reasonably well despite the crisis – it’s just that sales have shifted from physical stores to the internet.

“JD Sports has a very clear idea about who its customer is and what they want – namely trainers and so-called ‘athleisure’ gear which can be worn for working out and socialising (in more normal times) as well as hanging out at home.

“A short-term concern will be that its youthful customer base will be particular exposed to the mounting jobs crisis in the UK, given they are probably more likely to work in hospitality or other retail businesses.

“Longer term, while JD is still seen in a positive light by major sporting brands like Nike and Adidas, the former, in particular, is shifting to a more direct-to-consumer model, selling more product through its own website. For now though, JD is still a valued retail partner.”

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