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Author: Alan LittleDate: 2022-01-13

JD Sports (JD.) -1.94% despite forecast-busting full-year profit

JD Sports (JD.) closed lower on Wednesday even though its adjusted profit for the latest year is set to beat forecasts following strong sales over the festive period.

JD Sports (JD.) said that it was confident of posting a forecast-beating profit during the latest financial year following a “robust” performance over Christmas, but its shares still traded down 1% in London on Wednesday.

In its latest update, the sports-fashion retailer said that it was on track to deliver an £875m profit for the 12 months to 29th January 2022, which is a figure that would handily trump the £810m expectations.

JD is a British-based company, but its operations in the US have added more than £100m to its bottom line amid strong demand for its products.

Sales are healthy having risen 10% during the five-month period to 1st January, with trading across both Black Friday and Christmas being elevated.

JD has run into some of the supply constraints that have hit other companies in recent months, but it has managed to weather those particularly well.

Overall, JD said that its “robust performance” can be attributed to its diverse product and brand offerings, and its strength in merchandising.

It concluded the latest update by guiding for profits to be flat during the 12 months to January 2023, which might not be eye-catching for investors, but is still an improvement on prior forecasts.

Quilter Cheviot analyst Amisha Chohan was impressed by JD’s latest numbers and believes that they highlight its leading position in athleisure.

She noted that unlike some other retailers, JD does not have a “fragile” financial structure, which will bode well in the long term, and is able to rely on its trusted partnerships with Nike and Adidas.

Chohan concluded: “Furthermore, in an environment of increasing inflationary pressures, JD Sports benefits from strong pricing power and a younger consumer base.”

Despite an encouraging update, JD finished 1.94% lower at 207.40p on Wednesday.

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