JD Sports ups profits forecast on the back of strong festive trading
JD Sports says profits for the year January 2023 will be ahead of current market expectations having reported sales up 10% ahead for the 22-week period to 1 January 2022.
The sports fashion giant said it has achieved "an equally positive performance across the Black Friday and Christmas period" and was encouraged by the fact its gross margins were in line with the prior year.
This positive performance had come in the face of on-going challenges brought on by the pandemic including the disruption of the supply chain operations of some of its key brand partners and was testament to the relationship its fascias (which include JD Sports and Size?) had with its customers, its strong operational infrastructure and the agility of its multichannel operations, the group said.
"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," its trading update said.
Looking ahead the group said it was well positioned to manage the continuing supply chain challenges and Covid restrictions due to its buying and merchandising power and its deep relationship with consumers.
"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," it added.
Executive chairman Peter Cowgill said: "The commitment of our colleagues is crucial to our success and I would like to thank everyone in our various businesses for their significant contribution in delivering this outstanding performance."
A low point for the group during the period was the ruling by the CMA that it must offload its Footasylum acquisition following its purchase of the chain for £90 million in March 2019. The competitions authority ruled that Footasylum was JD Sports' nearest rival and its absorption in the group could lead to less choice and higher prices for consumers, something which JD had strongly refuted.
The chain must now be sold to a company which will continue to run it as an independent entity, the CMA has said, with rival group Frasers, which owns Sports Direct, said to be interested in potentially picking up the chain.
JD Sports preliminary results for the year to 29 January 2022 will be published on 12 April.