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British sportswear retailer JD Sports posted a jump in sales in its second quarter, as 85 new store openings in the first half of the year and US growth helped offset a decline in the UK.
JD Sports, which has about 4,500 stores across more than 30 countries, posted like-for-like sales growth of 2.4 per cent in the 13 weeks to August 3, marking an improvement after a fall in sales in the first quarter.
The retailer, which recently acquired New York-listed rival Hibbett in a $1.1bn deal, said the strongest growth came from the US, where sales rose by 5.7 per cent, while Europe also helped offset a 0.8 per cent fall in the UK.
Chief executive Régis Schultz credited “the continued success of our JD store rollout programme” for the quarterly improvement, adding that the update demonstrated “the strength and agility of our multi-brand model”. Shares in the company were up 9 per cent in early afternoon trading.
The update comes after JD Sports, which sells brands such as Nike and Adidas, issued a profit warning in January, as customers cut spending, sending shares down by almost 20 per cent.
The company warned on Thursday that the overall market remained volatile, but left its annual guidance unchanged.
Analysts said the quarterly uplift in sales suggested JD Sports had turned a corner, with the retailer appearing to shrug off a slowdown in demand at Nike. Shares in the world’s biggest sportswear maker by revenue plummeted 20 per cent in June after it said sales would fall this year.
Robert Krankowski, an analyst at UBS, said, “the fact they’ve delivered this like-for-like growth despite the fact that we’re hearing [about] all this weakness [at] Nike is very impressive”.
He said the success of other brands such as Adidas and On was likely to have been important to JD Sports’ performance in the first half, estimating that Nike had made up more than 50 per cent of JD Sports’ sales in the previous year.
“JD is well placed to outperform in the next 12 months and it stands to benefit the most from [improvements Nike makes],” he added.
JD Sports has been expanding aggressively in recent years, including via its addition of Hibbett — its biggest-ever acquisition. Schultz said the US would make up 45 per cent of JD’s revenues by the end of 2025 but the company was “not thinking about doing any more significant acquisitions in the US as we believe we now have the right set up [there]”.
He said the group’s growth potential in Europe “could be fulfilled with acquisitions in some countries”, however.
Schultz said JD Sports’ global reach gave it a competitive edge in spotting trends, such as predicting the popularity of Adidas Samba trainers, which he said were not popular in the US two years ago but were now its best-selling product for women in the country.
“The beauty of the model is that they have that global access, they’ve got relationships with lots of brands so they can [for example] ask, say, Adidas to step up when there’s less innovation from another,” said Jonathan Pritchard, an analyst at Peel Hunt who believes JD’s shares are “seriously undervalued”.
