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JD Sports Fashion Plc Announces Its Second Quarter Trading Update For The 13 Weeks To 3rd August 2024
Trading for the Group in the period, on a constant currency basis, was in line with expectations. Like-for-like (‘LFL’) sales were up 2.4% and organic sales were up 8.3%. As a consequence, first half LFL sales were up 0.7% and organic sales were up 6.4%. The quarter-on-quarter (‘QOQ’) trading improvement was driven primarily by the strength of their multi-brand operating model and softer comparatives with the previous year.
Regionally, LFL growth was strongest in North America (+5.7%) and Europe (+3.0%), while the UK improved materially QOQ. Organic growth was achieved in all regions, led by North America with 13.7% growth. All three main segments – JD, Complementary Concepts and Sporting Goods & Outdoor – achieved LFL growth and the JD segment benefitted from new store openings to deliver 11% organic growth.
While the overall market remains volatile, JD showed good promotional discipline and managed inventory proactively to support gross margins in the period. Gross margin for the Group in the period was 48.4%, down 30 basis points (bps) on last year. This decline was seen mainly in apparel and online, where its higher penetration resulted in the UK being most impacted. The first half gross margin for the Group was therefore 48.3%, 10 bps below last year and inventory levels at the end of the period were as we expected.
JD completed the acquisition of Hibbett, Inc. (‘Hibbett’) on 25 July 2024*, just ahead of the period end. Hibbett is a great addition to our Complementary Concepts segment in North America and adds material scale and presence in the US through its 1,179 stores, strengthening further brand relationships in the world’s largest sportswear market. Hibbett, with its strong community presence, also provides an enhanced platform for the mall-led, nationwide growth of the JD brand in North America through its efficient supply chain and strong back office.
During the first half, they opened 85 new JD stores, which along with the Hibbett acquisition and the ongoing disposal of non-core stores, meant the first half ended with 4,506 stores, up 1,189 from the start of the year.
The global macro environment remains volatile and so they continue to be cautious on their outlook for the rest of the year. Notwithstanding this, based on JD’s first half trading and allowing for an anticipated c.£15m headwind at current exchange rates due to a stronger pound, they are maintaining our guidance range of profit before tax and adjusting items of £955m to £1,035m, on a pre-Hibbett basis.
