Shares in retailer JD Sports Fashion (JD.) are bid higher on Wednesday, up 4.5p to 898p as record interims foster another round of earnings and target price upgrades. Bossed by executive chairman Peter Cowgill, the sports, fashion and outdoor brands purveyor delivers an outstanding performance from its core sports fashion business and flags a positive start to second half trading to boot.

Click here to drill down into JD Sports' forecast-busting half-time results. Pre-tax profit surged 82% higher to £46.6 million on a second successive year of double-digit like-for-like sales growth, though euro weakness – the company buys in sterling to sell in euros in its JD European fascias – weighed on margins.

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Differentiated from rival Sports Direct International (SPD), JD Sports Fashion's core JD format is flourishing in a booming segment of the retail market, has the support of leading sporting brands Adidas (ADS:GR) and Nike (NKE:NYSE) and boasts significant development potential overseas with a European roll-out underway.

Web chart - JD Sports - Sep 15

The retailer finished the half with £100.3 million net cash, though as Cantor Fitzgerald Europe's Freddie George notes, the dividend is only being increased 4.3% to 1.2p, 'indicating that the company has “its eyes” on an acquisition'. George upgrades his full-year pre-tax profit forecast from £119 million to £124 million and his target price from 830p to 980p.

Elsewhere, Investec Securities' retail guru Kate Calvert reiterates her 'buy' rating but ups her price target from £9 to £10.40. 'These results show the benefits of several years of store and infrastructure investment, a growing online business, strong product ranges and good supplier relationships, helped by European expansion and in-store investment,' comments Calvert, upgrading her full-year pre-tax profit estimate by 6.5% to £128 million.

'The beat against our estimate stemmed from the core sports fascias,' writes N+1 Singer's Matthew McEachran. 'The combination of operational initiatives and positive end market trends suggests to us that forecast risk could still be to the upside there. Outdoor is still loss making and continues to carry surplus Autumn/Winter 14 stock, but changes there suggest it is on track for a return to profit in FY17. Overall the business is in good shape and investing heavily both in the UK and overseas.'


Issue Date: 16 Sep 2015