The FTSE 100 ‘athleisure’ retailer reported a pre-tax profit for the twenty six weeks ended 3 August of £129.9mln, up from £121.9mln in the prior year, while revenues jumped to £2.7bn from £1.8bn.
Like-for-like sales were also up by over 10%, while JD’s interim dividend was also increased to 0.28p per share from 0.27p previously.
Looking ahead, the group said it had seen “continued positive trends” into its second half, and despite the ongoing certainty of Brexit and an expectation of tougher comparatives, it would have been “confident” of delivering a full-year pre-tax profit at the “top end” of market expectations, which currently range between £402-£424mln.
However, due to the impact of the new International Financial Reporting Standard (IFRS) 16, which alters the way earnings are reported, the firm said it now expected to deliver results at the mid-point of expectations, although it remained “encouraged” by its prospects for further growth.
Peter Cowgill, JD’s executive chairman, said the results were “encouraging” against what he said was a “backdrop of widely reported retail challenges in the UK”.
He added that the group had also seen an improved conversion rate, reflecting customer’s “increasingly positive reaction” to the company’s multi-channel offering.
House broker ups target price
In a note, analysts at JD’s broker Peel Hunt upped their target price for the firm to 700p from 650p and retained their 'buy' rating following a first half that they described as “nothing short of stellar”.
“JD’s attractiveness to shoppers and suppliers (and investors) is at an all-time high and we see little chance of this changing”, the broker said, adding that despite the IFRS 16 drawback they could not think of any other retailer that was “in such rude health”.
International expansion next focus, says analyst
Russ Mould, investment director at AJ Bell, said that with its “massive success” in the UK market, JD’s story was now one of international expansion and product diversification.
“Europe is already off to the races with the company deciding to increase the physical size of new stores, showing confidence that consumers like its offering”, Mould said, adding that recent acquisitions such as the men’s clothing brand Pretty Green and a majority stake in designer clothing seller Giulio Fashion suggested JD was “prepared to go beyond the standard sports-related leisurewear”.
The strong results sent JD’s share surging 5.6% to 668p in mid-morning trading on Tuesday.