In an update, the FTSE 250 sportswear retailer said that total sales growth for the 48 weeks to 5 January was up 15% across its global Sports Fashion fascias, while total like-for-like growth was more than 5%, including what the firm said was “a consistently positive” performance across the Black Friday and Christmas periods.
JD added that gross profit margins had been maintained at prior year levels as it continued with its policy “not to enter into short-term reactive discounting unnecessarily”, a trend that many struggling retailers engaged with over a difficult festive period.
“Given the well-publicised challenges within the wider UK retail market, we are pleased with this trading result which further demonstrates the robust foundations of our dynamic multibrand multichannel proposition across our core market and our capacity for further growth across an expanding geographical reach”, the company said.
In the second half of its fiscal year, the company said it had opened its first two stores in Thailand as well as its first five stores in the US.
While the group said it was too early to draw conclusions from its US performance, the initial performance gave the firm confidence to convert a further 15 Finish Line stores in the first half of 2019 after acquiring the US firm for US$558mln in March.
For the wider Finish Line business, JD said it was “encouraged” by the ongoing performance, which had delivered improvements in “both sales and margin” relative to the prior year.
The company also said the first phase of works to fit out a 352,000 square foot extension to its primary warehouse in Kingsway had been completed, with works to install automation equipment due to complete in Spring 2019.
Despite labour cost inefficiencies from the transition to the enlarged site, JD said it was confident that the group’s pre-tax profit for the full year would be “at the upper end of published market expectations”, which currently range between £325mln-£352mln.
Peter Cowgill, executive chairman of JD, said: "I am pleased with the continued progress of the Group both in terms of our performance in existing markets and the recent positive developments in the United States. We are confident that domestically and internationally, in stores and online, our unique and often exclusive sports fashion premium brand offer provides a solid foundation for future development.”
The results will grant some relief to investors after JD’s chief financial officer Brian Small left at the end of October after 15 years in the role and was replaced by Neil Greenhalgh, the company’s finance director who has been heavily involved in its international expansion.
JD has also bucked the trend of gloomy retail figures for other retailers over a slump in festive trading, with retailers such as Debenhams PLC (LON:DEB) and Halfords PLC (LON:HFD) suffering particularly badly.
READ: Tesco, Next and Ted Baker among the festive winners as high street survives Christmas - but only just
The sportswear firm, however, seems to be on a roll after delivering record-breaking earnings in the first half when pre-tax profits surged 19% to £121.9mln.
Brokers hail “excellent" update
In a note to clients, analysts at City broker Peel Hunt said the group had delivered a “quite frankly – excellent trading update, with LFL accelerating across the globe”.
“The UK’s performance (inc online) is LFL positive, but the real eye-catchers are Europe (where in-store LFL is double-digit) and in the US, where LFL is c5% and gross margins are handily ahead. Forecasts must rise (held back a bit by some extra cost of the DC overhaul), and this is a great example of the fact that retail conditions are not impossible for a retailer with the right product and proximity to its customers.”
Analysts added that JD was their “top pick in the sector”, combining “a very strong core domestic business with high growth opportunities in Europe and a transformational acquisition in the US”.
The sentiment was echoed by analysts at fellow broker Shore Capital, which reiterated their ‘Buy’ rating on the stock saying the firm remained “a tightly managed company with good cash generation, international expansion and good growth prospects”.
“The shares have fallen 11% over the last three months and with this good news in tow we reiterate our BUY rating highlighting the growth-opportunities both internationally and in the UK that the Group can harness plus scope for rating expansion.”
JD Sports shares were up 10.4% at 437.3p.