JD Sports Fashion (JD.) managed to beat expectations again with these half-year numbers. The sportswear retailer not only reported good sales and margin growth across the UK and Europe, but there are signs of a strong start in the US, too. The acquisition of athletic footwear business Finish Line – which is headquartered in the US state of Indiana – completed towards the end of June, with JD now in control of 553 Finish Line retail stores, 375 concessions with shopping centre partner Macy’s, and a thriving e-commerce operation. JD’s intention is to operate a dual-fascia strategy in the US, which means some JD products and branding will be rolled out to several specific trail locations this year. During the seven weeks post-completion, Finish Line contributed £4.8m to a group operating profit total of £124m from £180m of revenue.
Expansion across Europe also remains a key focus for the company. Of a net 44 new openings, 39 of these were in international markets and 18 in Europe, with a similar number slated to open on the continent in the second half. Across Asia Pacific, 21 stores were either opened or converted to JD branding. Together, these new openings helped lift sales for the sports fashion division by a whopping 40 per cent to £1.64bn.
In the outdoor segment, sales growth was more muted, with gross margins contracting from 43.3 per cent to 43.1 per cent after the recent heatwave deterred shoppers from stocking up on waterproofs and other rain gear during the second quarter. But better online sales growth across the board kept group revenues up, with gross margins expanding from 47.4 per cent to 48.2 per cent.
Solid trading into the second half has prompted further upgrades from Peel Hunt, reflecting both progress online and overseas. The brokerage now expects pre-tax profits of £345m for the year ending January 2019, giving EPS of 27.9p, compared with £307m and 25.2p in FY2018.
| JD SPORTS FASHION (JD.) | ||||
| ORD PRICE: | 489p | MARKET VALUE: | £4.75bn | |
| TOUCH: | 488-489p | 12-MONTH HIGH: | 517p | LOW: 312p |
| DIVIDEND YIELD: | 0.3% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 88p* | NET DEBT: | 9% | |
| Half-year to 4 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 1.37 | 103 | 8.1 | 0.26 |
| 2018 | 1.85 | 122 | 10.1 | 0.27 |
| % change | +35 | +19 | +24 | +4 |
| Ex-div: | 29 Nov | |||
| Payment: | 04 Jan | |||
| *includes intangible assets of £411m or 42p a share | ||||
