JD Sports sees 'challenging' market as January sales slip

28th Mar 2024 07:05

(Sharecast News) - JD Sports Fashion shares jumped on Thursday as investors breathed a sigh of relief that a trading update essentially reaffirmed guidance after a profits warning in January, despite continuing "challenging" trading and flat like-for-like fourth-quarter sales.

The sportswear chain said it expected full-year profits to be within guidance of £915m-935m. Like-for-like sales in Britain and Ireland fell 3.2% in the fourth quarter, due to a higher proportion of clothing sales than in other regions and less discounting compared with online rivals.

Clothing sales were weaker than footwear, the company added.

Chief executive Regis Schultz flagged that the current year would be tougher due to less product innovation and more discounting, but expected sales to pick up on the back of the Paris Olympics and European football finals in the summer.

Like-for-like sales in the final quarter rose just 0.1%, with January slightly down year-on-year due to elevated promotional activity in the market, particularly online, and against a very strong comparative of 25% growth a year earlier, he said.

Broker Shore Capital reiterated its 'buy' rating for the stock.

"In all, after the disappointment of the 4 January warning it makes for grounded reading, no further weakening in the FY24 out-turn and, with the benefit of deeper appraisal, a firmer basis for FY25," the broker said.

"Missteps have understandably hit the stock rating, making for a material discount to global peers, and that's the upside potential here is guidance is grounded and delivered. Hence, we have a sense of relief and reiterate our 'buy' stance on JD stock."

Reporting by Frank Prenesti for Sharecast.com