JD Sports set to report sales growth amid investor concerns over outlook
JD Sports is expected to reveal sales growth as investors will be keeping an eye out for an improved outlook after signs of cooler demand from shoppers.
The company is also expected to confirm that profits have dipped slightly over the year to early February, in an update to shareholders on Thursday March 28.
Shares in the company are down by around a third over the past year, with the retailer among firms being impacted by a challenging economic backdrop.
Investors will be looking for a more positive outlook after JD Sports cut its profit targets in its previous stock market update in January.
It told the market it was on track to deliver a pre-tax profit of between £915m to £935m in the year to early February.
This compared with previous guidance of a £1.04bn profit.
The latest projection also pointed towards a drop in profits, after the firm posted a profit before tax and adjusted items of £991m for the previous financial year.
JD shares plunged by over a fifth after the downgrade, which it blamed on weaker-than-expected trade over the key Christmas period and increased promotions to drive sales.
The company is expected to report a rise in sales, although there is likely to be a notable slowdown for the latter part of the year.
“On a statutory basis, analysts are looking for four per cent growth to a record £10.5bn,” according to AJ Bell’s Danni Hewson.
“However, there will be more interest in the like-for-like growth figure, which Mr Schultz quantified at eight per cent year-on-year in the first half, and just 1.6 per cent in the 22 weeks to 30 December, with the peak Christmas season softer still.”
Shareholders will be keen to see this growth pick back up in more recent weeks, amid a predicted boost from JD’s continued store expansion plan.
However, investors will go into the update with an air of caution after key supplier Nike provided a gloomy update in the US earlier this week.
The sportswear brand posted better than expected earnings for the latest quarter but said sales over the first half of the next financial year are expected to fall.
Analysts have predicted the expected fall, which is linked to lower stocking of certain products, could knock JD.
analyst Kate Calvert said: “JD not only has tough comparatives in the first half of 2024/25 but it is clear from Nike’s Q3 comments that there are likely to be lower levels of key Nike stock lines in calendar 2024 as Nike reins in key legacy franchises.
“We believe the Air Force One Lifestyle franchise is a particularly important one to JD.
“The question is whether Adidas and other brands can sufficiently fill Nike’s innovation and volume headwind to maintain reasonable sales momentum in full-year 2024/25.”
Press Association – Henry Saker-Clark