By James Davey
LONDON (Reuters) -JD Sports Fashion said on Wednesday it expected underlying profit to exceed 1 billion pounds ($1.3 billion) for the first time this year as demand for trainers, joggers and hoodies from its younger shoppers keeps growing.
JD has proved resilient to the cost-of-living crisis, with many of its young consumers not yet burdened by household bills, while its relationships with Nike and Adidas means special access for its shoppers to the latest trends.
“Our key customer target is a young adult and the young adult all over the world is benefiting from low unemployment,” CEO Régis Schultz told reporters.
The group, which trades from about 3,400 stores in 32 countries and online, is planning further expansion after underlying profit came in ahead of guidance for its last financial year, and as sales keep climbing.
Organic sales rose 12% in 2022/23 and were up over 15% in the first 13 weeks of its new financial year.
Schultz outlined plans in February to spend up to 3 billion pounds to open as many as 1,750 stores over five years, and said his aim was to turn JD Sports into an athletic leisurewear “powerhouse”.
Last week, JD said it had agreed to buy France’s Groupe Courir for an enterprise value of 520 million euros.
It has a growing exposure to the U.S. market and is also adding new stores in Italy, Germany and Spain.
Shares in the group have jumped 31% so far this year, but were down 3% in morning trading.
Its market capitalisation of 8.8 billion pounds is more than the market value of supermarket Sainsbury’s and more than double that of Marks & Spencer – two stalwarts of British retailing.
And analysts say it has further to run.
“We believe the growth potential is not reflected in the shares,” analysts at Peel Hunt said.
For its last financial year ending Jan 28, it reported profit before tax and adjusted items of 991.4 million pounds, up from 947.2 million pounds in 2021-22.
For 2023-24, it forecast profit of 1.03 billion pounds.
However, at the statutory level pretax profit in 2022-23 fell to 440.9 million pounds from 654.7 million pounds, after JD booked 550.5 million pounds of adjusted items.
(Reporting by James Davey; editing by Paul Sandle, Sarah Young and Kim Coghill)
