JD Sports positive note

JD Sports released an interim management statement today (17^th June) – there wasn’t anything in it by way of numbers but it can be seen as positive.

According to the retailer, the build-up to the World Cup has “enhanced the trading performance” of its core sports business – which accounts for the bulk of JD Sports’ sales (some 79%) and all of its profit.

In light of all that, JD sports reckons it’d be misleading to update the market with precise like-for-like sales figures at this point.

Regarding JD Sports’ other business, its outdoor division (this includes stores such as Blacks and Millet) is maintaining positive progress.

Additionally, its fashion business (which comprises stores like Bank, Scotts and Cloggs) continues to experience “varied performance”, though the company reckons there are encouraging signs for the future.

Based on its performance thus far, JD Sports expects a “satisfactory increase” in first-half profitability in line with its expectations.

JD Sports’ good run

Indeed, the company, whose CEO, Barry Brown, stepped down in May, has had a good run over recent times.

In April, for instance, JD Sports posted around a 6% rise in revenue at £1.3bn, for its year ended February. Adjusted pre-tax profit for the period came in at around £77m, marking a healthy 27% increase over the previous year.

That was predominantly thanks to strong performance in its sports division, which boasted a 20% increase in operating profit, and, contrasts from the company’s outdoor and fashion businesses.

Those divisions, which have been undergoing turnaround attempts, posted losses for the year, though the company’s outdoor arm’s loss was narrower compared to the prior year.

JD Sports’ valuation has equally been on the rise…

The company’s shares, which are currently slightly down, have soared roughly a whopping 80% over the last year alone, and it now sports a valuation of some 13x expected 2015 earnings.

But that’s still a discount to some of its peers, US-based Footlocker for instance, which trades at 15x, not to mention fellow UK-based player, Sports Direct, at 20x.

Meanwhile, the company is chasing further growth

Aside from a string of brand acquisitions last year, JD Sports has been moving to expand internationally. That includes its new store openings in France and Spain, as well as the company’s acquisition of stores in the Netherlands and Germany.

Still, with a relatively healthy balance sheet (net cash position of some £45m as at February), JD Sports has the means to continue pushing ahead with its expansion efforts and, despite strong competition, it looks to be positioning well to deliver more value for now.