Sales and profits jump at JD Sports in "another period of excellent progress"
JD Sports has reported sales up 12% to £10.1 billion in the year ending 28 January 2023 in what has been described by its chair as "another period of excellent progress", despite wholesale leadership changes.
Pre-tax profit before adjusted items for the period hit a record £991.4 million (2022: £947.2 million). After adjusted items of £550.5 million (related in part to impairments on previous acquisitions), pre-tax profit was £440.9 million for the period (down from £654.7 million), while gross margin edged down from 49.1% a year ago to 47.8%.
Following the exit of long-standing executive chair Peter Cowgill, the group underwent a change of leadership last year with Andrew Higginson joining as chair in July followed by the arrival of a new CEO, Régis Schultz, last autumn.
Higginson said the group had not allowed the changes to distract it as it steered towards another record year. "In July 2022 I had the great privilege of being appointed the Chair of the JD Group. This followed the departure of Peter Cowgill who had led the business so successfully for the previous 18 years. I found a business that had a strong leadership team, committed staff and a supportive majority shareholder in Pentland. The business was in tune with its customers, respected by its branded suppliers, was trading strongly and had a significant number of opportunities for growth ahead of it."
Schultz's arrival led to the group doubling down on its core market of sports and it quickly divested a number of non-core fashion brands (including retailers Giulio and Cricket) to rival Frasers Group. Schultz also outlined its plan to be a truly global sports retail force.
During the latter half of the last financial year, Higginson said the business had seen a significant increase in trade, in particular in North America where the supply of product had normalised following supply chain issues in the wake of the pandemic. As such the business has its sights set on further expansion in the North American market as part of its recently revealed ambitious growth plans to open up to 350 shops globally each year.
It has been growing rapidly in the US, including adding a flagship store in Chicago, and had 58 net new store openings across Europe such as in Hungary and Greece.
The group said it had been encouraged by demand from its young adult customer base and that while it prices had increased by between 5% and 10%, the group was well position to offer "affordable luxury" to its target market.
“Our key target customer is the young adult, and the young adult all over the the world is benefiting from low unemployment, and I think that is driving the morale and the revenue of our key customer.”
Its key buyers have more money to spend because they can more easily find a job today than they could three years ago, he said.
He added: “Our sneaker is the new normal for footwear, and you can see that in the streets, where about 80% of shoes are sneakers – which are much less expensive than formal shoes.”
Schultz also said he “embraces competition” from fashion retailers, such as H&M and ASOS, expanding their sportswear ranges, adding that JD is growing online where others are not.
Chair Higginson sounded a note of caution about the headwinds facing the business in the coming financial year. “Whilst we are encouraged by the resilient nature of the consumer demand in the current period to date, we remain conscious of the headwinds that prevail at this time including the general global macro-economic and geopolitical situation.
“Against this backdrop, assuming current exchange rates, we expect that the group’s headline profit before tax and adjusted items for the 53-week period ending February 3 2024 will be in line with the current average consensus expectations of £1.03 billion.”
