JD Sports Fashion Plc shares were down nearly 6 percent in early trading in London on Tuesday after the retailer, parent of the JD, Finish Line, DTLR and Shoe Pavilion in the U.S., provided an update on the current year business for attendees at its Annual General Meeting. Sales growth was more moderate than many analysts expected due to weakness in the North American market.
The company told the attendees that there was “further positive trading in all regions through May,” with overall growth in organic sales at constant exchange rates of around 8 percent in the month.
When J.D. reported results for the fiscal year ended on January 28, management advised that it was reassured, based on sales through the first three months of the year, with forecasting organic sales growth of more than 15 percent at constant exchange rates for the year. J.D. said the moderation in the growth to 8 percent through May aligned with management’s expectations and reflected tougher comparisons to the prior year as the supply chain normalized and product availability improved.
Management said the positive trends had continued through June in the businesses in the U.K., Europe and Asia Pacific; however, the growth from these regions was partially offset by its businesses in North America, which reportedly experienced some softening consistent with others in the sector.
J.D.’s largest competitor in North America, Foot Locker, Inc., axed its guidance for the year in May and indicated it would miss medium-term targets set in March as sales had dropped sharply below expectations. Read SGB Media‘s report here. Still, J.D. management felt cleaner inventories in the region offset the promotional risk. “Inventories in our businesses in North America are at normal levels, and we will be no more promotional than we need to be to remain competitive,” the company stated.
The Board maintains that the headline profit before tax and adjusted items for the year ending February 3, 2024, will align with the current average consensus expectations of £1.04 billion. The Board also expects that the phasing of the profit in the current year will reflect a normalized trading pattern, with approximately 35 percent of profits generated in the first half.
Consistent with its ‘JD First’ and global growth strategy, the company opened a net additional 32 J.D. stores in the first four months of the year and is on track to open more than 150 stores for the J.D. nameplate over the course of the year in line with the targets set out in the company’s Capital Market Event in February.
Elsewhere, J.D. Sports continues to anticipate that the proposed acquisition of the complementary Courir business in Europe, which represents its first acquisitive steps in fulfilling the business’s growth ambitions in under-penetrated markets, will formally close later in the year. The mandatory consultation process with the Courir works council is complete, with progress made on preparing the mandatory anti-trust submission.
J.D. Sports Fashion Plc, parent of J.D., Finish Line, DTLR and Shoe Palace in the U.S., reported to attendees of its annual general meeting that for the current year, company shares were down nearly 6 percent in early trading in London on Tuesday.
