Shares in JD Sports Fashion (JD.) rallied 2.6% to 122p after the must-have trainers-to-tracksuits seller issued a positive trading update and delivered another profit upgrade in the face of a global shortfall in the supply of ‘certain key footwear styles’.
The FTSE 100 retailer’s shares have fallen more than 40% year to date on worries about consumer spending and despite the latest upwards earnings revision, management’s cautious outlook kept the lid on upgrade-related share price gains.
REASSURING RESILIENCE
In a short trading statement, the self-styled ‘king of trainers’ said it is ‘reassured’ with the trading it has seen in the new financial year to date, with like-for-like sales up 5% in the 14 weeks to 7 May 2022.
Sports, fashion and outdoor brands purveyor JD Sports said this robust performance reflected ‘both the strength and breadth’ of its brand relationships and product offering and stressed it expects the troublesome footwear supply shortfall to ‘improve progressively through the year’.
ANOTHER UPGRADE
JD Sports, where executive chairman Peter Cowgill holds sway, expects pre-tax profits for the year to January 2023 will ‘at least be equal’ to the £940 million it now expects to report for the year to January 2022, when delayed results see the light of day next month.
The revised expectations represent upgrades of 4% and 7% for 2022 and 2023 respectively from the retailer’s earlier guidance.
UNDERSTANDABLY CAUTIOUS
‘Whilst we are pleased with the trading to date, which is at least in line with the group’s expectations, we remain conscious of the headwinds that prevail at this time including the general global macro-economic and geopolitical situation,’ cautioned the Lancashire-headquartered retailer.
‘In our view,’ commented Shore Capital, ‘JD Sports remains a best-in-class retailer amongst our universe of general retailers. The company is tightly managed with excellent cash generation, tight stock, and cost controls.
‘Today’s statement should reassure investors that the group remains on track as it delivers a year of good growth in revenue and earnings.’
