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Home » JD Sports Share Price Up As FTSE 100 Retailer Smashes Expectations

JD Sports Share Price Up As FTSE 100 Retailer Smashes Expectations

JD Sports has reported strong global sales growth in the second quarter of 2024, exceeding analysts’ expectations and leading to a share price surge of over six per cent in early trading.

Like-for-like sales at the FTSE 100 firm increased by 2.4 per cent in the 13 weeks leading up to 3 August 2024, equivalent to a 0.7 per cent rise in the first half.

Organic sales saw an uptick of 8.3 per cent, equating to 6.4 per cent for the first half of the year.

According to the company, the trading boost was “driven primarily by the strength of our multi-brand operating model and softer comparatives with the previous year.”

Read more: Subaru UK sees 40% sales surge but profits dip amid supply challenges Read more: Jamie Oliver’s restaurant sales rocket after opening new flagship London diner North America emerged as the frontrunner for growth, witnessing a 5.7 per cent increase in sales on a like-for-like basis, as reported by City AM.

Meanwhile, European sales saw a healthy three per cent climb.

However, the UK experienced slightly subdued growth, with like-for-like sales dipping by 0.8 per cent compared to the previous quarter, and down three per cent year-on-year in the first half.

JD Sports Chief Executive, Regis Schultz, attributed this decline to a “late summer” in the UK, impacting apparel sales.

Speaking on an earnings call, Schultz said: “Apparel doesn’t benefit from a later summer people buy when products are already on sale,”.

He further commented: “The UK is a more mature market for us… It’s a very different game,” adding, “We don’t have a lot of room to gain market share.”

The sportswear retailer also noted a 0.3 per cent decrease in gross margin to 48.4 per cent, attributing it to the “volatile” market, with apparel and online seeing the most significant declines.

File picture of a man carrying a JD string bag (Image: Sean Hansford | Manchester Evening News) Earlier in the month, sportswear retailer JD Sports saw its shares drop by over five percent following a downgrade by stockbroker Deutsche Numis, which cast doubts on the company’s cash generation capabilities.

Numis had predicted that the firm would see no growth in like-for-like sales.

JD Sports’ shares have not fully recovered from the impact of the downgrade and are still trading around 4p lower than their peak in early August.

“I am pleased to report like-for-like sales growth of 2.4 per cent and organic sales growth of 8.3 per cent in the second quarter, demonstrating the strength and agility of our multi-brand model,” said Schultz in a statement.

“In particular, we saw double-digit organic sales growth in North America and Europe, supported by the continued success of our JD store rollout programme.”

“We completed the acquisition of Hibbett just before the period end and we look forward to its contribution to the growth and development of our US business in the coming years.”

Schultz also confirmed that the company is “on track” to meet its full-year profit forecast, which ranges between £955m and £1,035m.

In the first half of the year, JD Sports expanded its presence with the opening of 85 new stores. Coupled with the Hibbett acquisition and the ongoing disposal of non-core stores, the company concluded the first half with a total of 4,506 stores, marking an increase of 1,189 since the beginning of the year.

Mamta Valechha, consumer discretionary analyst at Quilter Cheviot, commented: “JD Sports benefitted from easier comparisons and the summer of sports with the Euros and Olympics dominating the calendar.”

“We should see further growth following the acquisition of Hibbett, enhancing JD Sports’ exposure in the South-East and Mid-West of the US. This deal has been completed ahead of schedule and is highly complementary to the JD Sports business.”

“Most importantly, management reiterated its full year guidance of 6-9 per cent organic growth, highlighting that while JD Sports has been hit earlier in the year with weaker consumer spending, it is likely to bounce back due to innovation and the Hibbett deal bringing growth to the bottom line.”

Valechha added that the share price “does not currently reflect” the strength of JD’s market position and future growth potentials.

Analysts at Peel Hunt described the results as “somewhere between reassuring and good”.

They said the “very pleasing update” indicated that JD “continues to win market share, with its global presence making it the preferred partner to the global brands… the shares are seriously undervalued in our view.”

Peel Hunt reiterated a “Buy” recommendation.

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