JD Sports Fashion said it expects that its pre-tax profit for the financial year ending Jan. 29 year will reach a level of at least £875 million (€1,050m-$1,197m), well ahead of the analysts’ consensus averaging £810 million, as its sales went up by more than 10 percent on a same-store basis in the 22 weeks until Jan. 1, with “an equally positive performance across the Black Friday and Christmas period. We are also encouraged that gross margins for the second half are in line with the prior year,” said the company. Following the trading update, the group’s stock price spiked momentarily up to €229.40 from the previous day’s close of €218, but then settled back to former levels.
In view of the supply chain disruptions suffered by key brand partners, the company’s robust performance during the period “further demonstrates the strength of the relationship that our fascias have with their consumers, the agility of our multichannel operations, the strength of our operational infrastructure and the resilience of our colleagues,” JD commented, touting “its buying and merchandising capabilities, its breadth in brands and product assortment and a deep multichannel connection with the consumer.”
The extraordinary fiscal stimulus given by the U.S. government during the first half may have made an extraordinary contribution of £100 million to the projected profit for the year, JD said. Nevertheless, assuming no further restrictions in the U.K. and North America, the company said it expects to again beat current market expectations for earnings during the financial year ending on Jan. 28, 2023, as they will probably be largely similar to those of the present fiscal year, in spite of ongoing pandemic-related restrictions in Europe and Southeast Asia. They would subsequently return to historic norms, with about 35-40 percent of the profit generated in the first half of the year.
In announcing strong results for the first half ended last July 31, JD had already raised its guidance for the current financial year to at least £750 million from a previous forecast of £550 million. In the first half, the company’s revenues grew by 52 percent to £3,885.8 million, generating a gross margin of 48.5 percent, up from 45.6 percent in the corresponding period of the prior year, and pre-tax earnings of £364.6 million.
