Saturday, June 22, 2024

​​​JD Sports earnings lookahead

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​​​Growth overseas while UK business struggles

​New store openings are driving organic sales growth for JD Sports in North America, but the extra weighting of these sales is dragging down the group’s gross margin. However, this expansion has the potential to drive returns if the group can make headway in the US.

​In the UK and Ireland, same-store sales dropped 3.2% in the fourth quarter (Q4) due to weaker apparel sales and JD Sports’ low participation in promotional activities.

​Profit outlook for the year

​Looking ahead to fiscal 2025, JD Sports has provided initial pretax profit guidance of £900 million to £980 million under historic accounting methods. However, an accounting change will add £55 million to this guidance range.

​Acquisition expands reach but provides distraction

​The company is also proposing a £1.1 billion acquisition of Hibbett, which could accelerate growth if it receives regulatory approval, although the approval process may prove time-consuming and distracting for operational management.

​Analyst ratings for JD Sports

​JD Sports full-year results are expected to be announced on Friday 31th of May.

​LSEG Data & Analytics show a consensus analyst rating of ‘buy’ for JD Sports with 4 strong buy, 6 buy and 4 hold – and a mean of estimates suggesting a long-term price target of 168.54 pence for the share, roughly 37% higher than the current price (as of 21 May 2024).

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