Retail giant JD Sports Fashion believes its younger customer profile makes it more resilient to cost-of-living pressures after racking up its highest-ever weekly trading in the run-up to Christmas.
The sports clothing and trainers chain, which has a controlling stake in Scottish outdoor retailer Tiso, is now anticipating annual profits towards the top end of expectations after cheering festive revenue growth of more than 20 per cent. The group said the performance in the six weeks to December 31 was “particularly impressive” across both stores and online, helping it notch up total sales growth of 10 per cent in the 22 weeks so far of its second half. This compared with growth of 5 per cent in the first six months and puts it on track for double-digit growth for the full-year.
JD Sports said it now expects group underlying pre-tax profits for the year to January 28 to be towards the top end of market expectations, which range from £933 million to £985m. Chief executive Regis Schultz said the group had been able to keep a lid on price hikes, with a small increase thanks to easing supply chain disruption and shipping costs. He added that the firm continues to be sheltered from the wider cost-of-living impact on spending thanks to the younger profile of its shoppers and a resilient jobs market.
“Our consumer is young,” he said. “They don’t have the utility or the rent or the mortgage to pay. There’s a very volatile economic outlook, but we believe we have the best proposition to enter 2023.”
Mark Crouch, an analyst at social investing network eToro, noted: “The retail sector is having to fight hard for business in the current environment, which makes JD Sports 20 per cent year-on-year revenue increase over the Christmas period all the more impressive. Much of this uptick is down to improved product availability, according to JD, though presumably the sportswear chain has also benefited from a World Cup boost to sales, as kids up and down the country will have put football boots on their Santa wish list this year.
“Like all retailers, however, they will be at the mercy of consumer spending, which is showing signs of wobbling in the face of the cost-of-living crisis but has not yet reached its maximum impact,” he added.
JD said its North American business recovered strongly and saw growth of more than 20 per cent across the second half so far. Its businesses across the UK and elsewhere internationally have “maintained their first-half momentum, both in stores and online”. The firm said this was “reassuring and demonstrates the ongoing resilience of our proposition”.
Victoria Scholar, head of investment at Interactive Investor, noted: “The retailer enjoyed a bumper period of sales over the key Golden Quarter, demonstrating the robustness of demand in the face of pressures from a softening consumer outlook and inflated energy bills. Its premium brands and North America helped drive the outperformance, highlighting the resilience of consumers at the upper end of the income spectrum to pressures on the cost-of-living.”