D Sports has shrugged off the collapse of its Footasylum deal with a strong post-Christmas profit upgrade.
The footwear and sports clothing retailer said it now expects annual profits to be at least £875 million, ahead of current market expectations of £810 million.
Sales rose 10% in the 22 weeks to January 1, which JD called “extremely strong.” The company enjoyed “equally positive performance over the Black Friday and Christmas period”.
Strong sales over the 22-week period were partly due to an estimated £100 million increase from US stimulus last year. Millions of stimulus checks were sent to encourage Americans to boost their spending.
Going forward, JD faces “challenges” such as inventory shortages from certain brands, worldwide COVID restrictions and wage inflation, but the company said it was “well placed to manage.” Profits in the year to January 2023 are now expected to be in line with the current year, which will put it ahead of market forecasts.
Executive Chairman Peter Cowgill said: “The commitment of our partners is critical to our success and I would like to thank everyone across our various businesses for their important contributions to delivering this outstanding performance.”
Ameesha Chauhan, Head of Small Cap Strategy at Quilters Cheviot, said: “JD Sports is in a prime position to capitalize on athleisure demand, and posted a positive trading statement this morning. Management’s guidance for fiscal year 2023 has been raised, But still conservative in our opinion.
“Many retailers are still suffering from the same fragile financial structures they had pre-pandemic and will come under intense pressure. JD Sports, however, is a high quality business and is well-positioned to market and with a strong management track record and ‘trusted partner’ relationships with premium brands such as Nike and Adidas. The road ahead is clear for JD Sports.
“In addition, in an environment of increasing inflationary pressure, JD Sports benefits from strong pricing power and a young consumer base.”