Shares of JD Sports Fashion rose by 15.7 percent on the London Stock Exchange yesterday, closing at £134.50 (€156.85), after the parent of Go Outdoors, Millets and other retail banners predicted improved trading conditions in the months ahead, sparked by the Euro Cup and Paris Games this summer, softer year-over-year comparisons, and a stronger product pipeline by the end of 2024.
The group’s prognostication was revealed as it cited “challenging” current market conditions, fueled by less product innovation from vendors and a spike in online promotional activity, and predicted its profit before tax (PBT) in the upcoming FY25 would rise by 4.4 to 10.7 percent year-over-year to a range of £955 to 1,035 million (€1.1 to 1.21bn).
Before that, JD is expected to report FY24 PBT of £915 to 935 million, in line with its adjusted forecast made in early January, from year-over-year comparable store sales growth of 4.2 percent and by 8.4 percent on an organic basis. Total FY24 sales increased by 3.6 percent to £10.5 billion (€12.24bn) for the 12 months ended Feb. 3. Annual gross margin shrunk by 50 basis points to 47.3 percent, largely due to the higher percentage of sales generated in Europe and North America where margins were negatively impacted by higher promotional activity. The group opened 215 new JD stores during the FY.
On a geographic basis, Asia-Pacific had the strongest comparable sales growth in FY24 at 11.8 percent and an organic sales increase of 17.7 percent. All main markets contributed to the improvement, with particularly strong growth in New Zealand and Thailand. In Europe, meanwhile, like-for-like sales rose by 7.7 percent and by 15.3 percent on an organic basis as the region’s small Q4 comp sales gain of 0.9 percent was impacted by weaker results in northern countries but strong trading in Portugal and Italy.
In the UK and Ireland, annual like-for-like sales only improved by 0.8 percent and were down by 3.2 percent in Q4 due to weak apparel sales and the group’s decision not to engage in heavy online promotions. North American sales, meanwhile, increased by 4.1 percent on a comp basis in FY24 but only by 2.1 percent in Q4 in the highly promotional market.
Looking ahead, JD, which will begin to report quarterly results at the end of May, is forecasting low- to mid-single-digit sales growth in FY25. The first seven weeks of the year were described as in line with expectations.
