Retail star turn JD Sports Fashion (JD.) is in demand, the shares sprinting ahead another 30p (3%) to £10.38 as investors digest yesterday afternoon's unscheduled-yet-positive trading update. Building on a stellar first half, management says 'relatively strong trading has continued' into the second half, prompting the sports, fashion and outdoor brands purveyor's third profits upgrade this year.


In fact, JD Sports Fashion now reckons headline pre-tax profit 'is likely to exceed current consensus market expectations of £125 million by £10 million', so long as the remainder of the key Christmas and early January period continues in a strong vein. Though there is no absolute sales growth quantification for the four months to 3 December, the latest update from JD Sports Fashion, guided by executive chairman Peter Cowgill (pictured below), is impressive.

corporate Photos -  Peter Cowgill (1)

It demonstrates ongoing momentum behind the business, which generated like-for-like sales growth in excess of 10% across all group fascias (including those in Europe) in a record six months to 1 August and is now lapping a long streak of tough-to-beat sales comparables.

Web chart - JD Sports - Dec 15

Reiterating its 'buy' rating and increasing its price target from 980p to £12, Cantor Fitzgerald Europe suspects 'that like-for-like sales have continued to run at close to double-digit levels since the half year while gross margins have benefited from higher clothing sales in the mix with the support of the branded suppliers'. The broker points out the core JD format trades in a booming segment of the retail market, the group is clearly differentiated from fierce rival Sports Direct International (SPD) and also commands support from leading sports fashion brands Adidas (ADS:GR) and Nike (NKE:NYSE).

Believing JD Sports Fashion remains an exciting European roll-out story with good UK growth prospects, Investec Securities upgrades its year-to-January 2016 PBT estimate by 5.5% to £135 million, in line with Cowgill's new guidance. The upgraded estimate assumes bumper 8.5% second half same-store sales growth in the core sports fascias, while the broker's published price target rises from £10.40 to £11. All eyes will now turn to the post-Christmas trading update (14 Jan), where yet another round of upwards forecast revisions looks feasible.

Issue Date: 04 Dec 2015