JD Sports has buoyant year, Finish Line proving a good buy
Another day, another trading update and another good one too. On the same day that Shop Direct reported strong Christmas trading, JD Sports Fashion had good news too. The sports, fashion and outdoor brands retailer was reporting on the 48 weeks to January 5 and said that total sales growth in the UK and abroad was 15% for its global Sports Fashion chains.
The overall figure excludes the recent acquisitions of Finish Line in the US and Sport Zone in Iberia, but it said that like-for-like sales growth in these units for the same 48-week period is now more than 5% “including a consistently positive like-for-like performance across Black Friday and the Christmas period.”
It added that gross profit margins have been maintained at prior year levels as the company avoided “short-term reactive discounting unnecessarily.” And given the “well-publicised challenges within the wider UK retail market,” the company said it’s “pleased with this trading result which further demonstrates the robust foundations of our dynamic multi-brand multi-channel proposition across our core market and our capacity for further growth across an expanding geographical reach.”
The company has been positioning itself for continued fast growth and during the second half it opened its first two stores in Thailand. Shortly before the key holiday period it also opened its first five JD stores in the US, three of them conversions of existing Finish Line stores.
So is the US debut going well? “It is too early to draw any conclusions from the early performance, although we are encouraged by the developments to date,” the company explained. But it clearly has high hopes as it's going to extend its initial trial of the JD chain with the conversion of up to 15 further Finish Line stores in the first half.
Not that this means Finish Line will be phased out in its domestic market. The company said that it’s “encouraged by the ongoing performance of the wider Finish Line business which has delivered improvements in both sales and margin relative to the prior year. We remain confident that we are well placed to exploit the ongoing opportunities that exist to improve the future profitability of this business.”
And it added that it's also confident its headline group profit before tax for the year to February 2 “will be at the upper end of published market expectations, which currently range from £325 million to £352 million.
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