28 March 2024
If you are covering JD Sports' latest results, please see the following comment from Mamta Valechha, equity research analyst at Quilter Cheviot:
“JD Sports posted a considerably more encouraging full year trading update this morning than had been expected as the anticipated warning on profits did not materialise.
“Organic sales growth for the full year is up 8.4%, which is slightly ahead of what was guided in its January update and what consensus was expecting. Organic growth decelerated in Q4, though remained positive at 4%, given the mild winter and a softer, more promotional Christmas trading season.
“The UK was the weakest region in Q4, where sales turned negative as a result of two key drivers. Firstly, this region has the highest apparel sales mix in the Group and apparel performance was weaker than footwear; and secondly, JD opted not to participate fully in the significant, mainly online, promotional activity within the UK. All other regions saw organic growth in the high single digit to low teens range in Q4.
“Given the heavy promotional activity seen towards the end of last year, gross margins for the year were only down 50bps to 47.3%, which is quite commendable. Full year profit is expected to be in line with what was guided in January and the group is comfortable with its year-end inventories. Similarly, current trading is in line with group’s expectations, and initial guidance for FY25 brackets consensus, with JD guiding towards organic sales growth of 6-9%.
“JD Sports echoed Nike’s view on future performance, with the expectation that FY25 will be second half weighted, with Q1 being the weakest. The market remains challenging due to less product innovation and elevated promotional activity in key markets, particularly online. Trading conditions are expected to improve as we move through the year, propped up by a busy sporting summer, softer comparatives with last year from the second quarter and an improving product pipeline towards the end of the year.”
