PROFITS at JD Sports will top £1 billion next year, as chief executive Régis Schultz shrugged off negative chatter about the state of the UK economy and insisted the company’s own growth potential remains huge.
JD Sports has grown from a penny stock into a £7 billion FTSE 100 giant, in defiance of critics who once took a snooty attitude to its wares – and its customers.
Today JD showed its enduring appeal, with Christmas sales up 20% and more growth in prospect from its sports fashion brands.
In particular, sales of Nike Air Force One shoes have boomed.
The shares rose 7% to 151p.
While headlines fret about inflation and energy costs, analysts point out that many JD customers are young folk who don’t own homes and are protected from that storm.
New chief executive Régis Schultz was upbeat and insisted there was no need to be too negative about this year despite economic headwinds.
“People like to paint things in black. But unemployment is low….and people are able to get better paid jobs. That is driving a lot of revenue.” He added: “It is incredible to see the success of JD all over Europe. We are bigger in Europe than in the UK. The brand is generating a lot of good things outside of the UK.”
Profits for the full year to February 3 2024 should be just over £1 billion, an extraordinary figure. The business was mostly built by Peter Cowgill, retail guru unceremoniously ousted last year after a corporate governance row. He was paid a golden goodbye of £5.5 million after legal wrangles.
The figures today suggest the business has successfully moved on from the Cowgill era. Some of his later acquisitions of brands such as Liam Gallagher’s Pretty Green have been unwound.
Even if customers do feel the pinch, JD could still benefit.
Zainab Atiyyah, retail sector analyst at Third Bridge, said.
“Our experts expect JD Sports margins to remain under pressure for some time as customers forgo discretionary purchases and trade down, more promotional activities are required. This is a massive opportunity for JD Sports to leverage their own brands and build their value proposition.”
JD said in the statement: “Looking ahead, management are confident that consumers worldwide are more attracted than ever to JD’s differentiated proposition with its attention-grabbing theatre in stores, advanced digital technologies, breadth in the range of brands and availability of key styles.”
Gym-based New Year Resolutions could also provide a boost.
Sarah Riding at law firm Gowling WLG, said:
"JD Sports has performed well in the run-up to Christmas and will likely benefit from an increase in consumer demand as people start the New Year with health at the top of their agenda and gym memberships typically experience a surge.”
"Inflationary costs and pressures on day-to-day living could impact the sports retailer in the coming months. However, the business’ multi-channel approach positions itself above some of its rivals which are only available online. Indeed, the recent sale of 15 brands to Frasers Group will help the company to invest that money by focusing on its core sports brands in the international market.”