JD Sports has revealed a 45% jump in annual profits after a surge in demand for women’s sports clothing.
Sales at the group’s sports fashion stores, which include JD Sports, Size? and Scotts, rose by 11.6% in the year to 30 January as the company said it had also benefited from being the “dominant” retailer for top brands’ new product launches.
“Because we are the aspirational retailer we get first access and possibly exclusive access [to new launches],” said Peter Cowgill, the executive chairman.
He said the company did have competition from chains with a smaller presence in the UK, such as Foot Locker, but that its much bigger potential rival Sports Direct “services a different part of the market”.
He said sales of womenswear were growing even faster than the 10%-plus seen across the group’s sports chains as major brands sought to cash in on the catwalk-led trend for “athleisure” clothing. The likes of Nike and Adidas sportswear were expanding their clothing ranges to include the kind of sportswear worn increasingly outside the gym. JD Sports, Nike and Size? have all opened women-only stores to meet demand.
Cowgill said he saw no sign of the trend slowing down and JD would be one of only a handful of outlets selling Beyoncé’s athleisure line, Ivy Park, which launches on Thursday in partnership with the Topshop owner, Sir Philip Green.
“It is about moving forward all the time and not staying still. Recognising the level of appeal and satisfying that by moving with trends,” Cowgill said.
Shares in JD rose nearly 2.5% to £11.89 as the company revealed better than expected pre-tax profits of £131.6m in the year to 31 January – up from £90.5m the previous year. Excluding one-off items, profits were up by 57% to £157.1m.
The sports fashion division posted an operating profit before one-off items of £162.9m, a rise of 49% as the strong rise in underlying sales offset fixed costs. Margins improved as the retailer did less discounting on its autumn and winter ranges than in the previous year.
Rebecca Marks, an analyst at the consultancy Verdict Retail, said the results reflected the retailer’s “strong relationship with its suppliers and improved buying and merchandising disciplines – representing a crucial key differentiator from its fierce rival Sports Direct”.
But she said it would be “a challenge to maintain this level of growth in the longer term”.
JD is planning to open more stores in the UK and mainland Europe, where it now has 103 JD outlets and about 180 other stores, including the Chausport chain in France and Sprinter in Spain.
The group opened a net 38 JD stores across Europe last year, including a new flagship store in Amsterdam, and Cowgill said he expected that level of expansion to continue, subject to strict investment criteria.
The group also plans to open more stores in Malaysia after opening its first location outside Europe at Sunway Pyramid shopping centre near Kuala Lumpur.
JD has been outperforming Sports Direct, owned by the billionaire Mike Ashley, which issued a profit warning in January. JD’s stock market valuation overtook that of Sports Direct last month, but now stands at £2.31bn, compared with Sports Direct’s £2.39bn. The latter owns a 6.9% stake in JD – the company’s second biggest investor behind Pentland Group, the owner of Speedo and Berghaus.
JD has been trying to turn around its loss-making outdoor business by bringing the Blacks, Millets and Ultimate Outdoors brands under common leadership. The division’s operating losses were reduced to £4m from £7.1m, with the Blacks and Millets stores breaking even. The losses were mainly caused by costs related to the larger Ultimate Outdoors stores, which are still being developed.
