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JD Sports (JD) +2.98% on £500m profit forecast for 2021
JD Sports Fashion (JD) shares climbed 2.98% on Tuesday after the sports apparel retailer forecast profits of up to £500m for the year on strengthening demand domestically and successful expansion abroad.
Executive chairman Peter Cowgill said that the COVID-19 pandemic had posed “unprecedented challenges”, but that a “number of positive themes” had emerged that are a testament to the company’s position as the leader in sports fashion.
Revenue rose to £6.2bn during the year to January 2021 and profits for the same period came in at £421m, which was £18m lower than in 2019 but comfortably ahead of the £295m forecasts.
The strong forecast for the current financial year to January 2022 is a sign that UK retail could thrive in the months to come.
This is a view espoused by analysts at Peel Hunt, who believe that companies in fashion and home could really blossom when “things get really going again”.
After a year spent largely at home, consumers are looking for occasionwear, with Peel Hunt revealing that even trips to the pub are now a time for new outfits.
Investors appear to recognise this as clothing designer Quiz (QUIZ) jumped 8.33% on Tuesday, even though its annual revenues slumped 66% to £39.7m.
IG analyst Chris Beauchamp believes that retail is currently a “wise” outlet for investors when the right mix of stocks are chosen.
“Like its cousin Next (NXT), JD has enjoyed a stellar recovery over the past year,” Beauchamp said.
JD Sports traded higher throughout the session on Tuesday and eventually closed at 940.80p.
Following the reopening of stores on Monday (12th April), analysts see a busy period of shopping over the weekend and robust demand well into the summer.
This bodes well for retail stocks that have struggled to gain traction due to COVID-19 restrictions and store closures during the last 12 months.
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