REG - JD Sports Fashion - FY24 TRADING UPDATE

JD Sports FashionAnnouncement

28/03/2024 07:00

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RNS Number : 6042I  JD Sports Fashion PLC  28 March 2024

28 March 2024

JD SPORTS FASHION PLC

 

FY24 TRADING UPDATE

 

OUTPERFORMING A CHALLENGING MARKET

 

JD Sports Fashion Plc (the 'Group'), the leading retailer of sports, fashion
and outdoor brands, today announces an update covering both a trading outcome
summary for the 53 weeks to 3 February 2024 and guidance for FY25.

Régis Schultz, CEO of JD Sports Fashion Plc, said: "In our FY24 financial
year, we outperformed the sportswear market, reflecting the strength of our
business. We achieved like-for-like sales growth of over 4%, organic growth of
over 8% and our athleisure fascias achieved organic growth of over 10%. We
made good strategic progress, opening 215 new JD stores, and focusing our
effort on developing JD and enhancing EPS through taking full control of ISRG
and MIG. We expect profit before tax for the year to be in line with the
guided range given in January.

"Looking ahead, the current trading environment remains challenging due to
less product innovation and elevated promotional activity, especially online.
We anticipate trading conditions will improve as we move through the year,
helped by a busy sporting summer and softer comparatives with last year. We
continue to invest in our people and the infrastructure needed to deliver our
long-term growth plan. I am excited about the opportunities for the JD Group
going forward and our ability to deliver attractive returns to shareholders."

Highlights

·      FY24 Profit before Tax and Adjusted Items (PBT) expected to be in
line with the £915-935m guided range

·      On a constant currency basis

o  Q4 like-for-like (LFL(1)) sales were up 0.1% and organic(2) sales were up
4.4%

o  FY24 LFL sales were up 4.2% and organic sales growth was 8.4%

·      Total sales grew 3.6% to £10.5bn while gross margins were 47.3%

·      Opened 215 new JD stores

·      Initial FY25 PBT guidance, pre-accounting adjustment, of
£900-980m

·      Trading in the new financial year-to-date is in line with our
expectations after seven weeks

(1)The percentage change in year-on-year sales after removing the impact of
new store openings, closures, acquisitions and disposals in the current or
previous financial period, comparing 53 weeks from 29 Jan 2023 to 3 Feb 24
with 53 weeks from 30 Jan 2022 to 4 Feb 2023

(2)LFL sales growth plus the net growth attributed to new space, comparing 53
weeks from 29 Jan 2023 to 3 Feb 24 with 53 weeks from 30 Jan 2022 to 4 Feb
2023

FY24 Trading Outcome

 FY24 sales (constant currency)  LFL           Organic
 Y-o-y change                    Q4     FY     Q4     FY
 UK/ROI                          -3.2%  0.8%   -2.5%  1.5%
 Europe                          0.9%   7.7%   8.9%   15.3%
 North America                   2.1%   4.1%   7.7%   9.3%
 Asia Pacific                    8.3%   11.8%  12.3%  17.7%
 Group                           0.1%   4.2%   4.4%   8.4%

( )

Total sales were £10.5bn, up 3.6% on the previous year, including a -6.2%
impact from disposals and a 1.4% benefit from the 53(rd) week. PBT for the
year to January 2024 is expected to be in line with the revised guidance range
of £915-935m.

LFL sales in Q4, on a constant currency basis, were marginally ahead of the
previous financial year. January was slightly down year-on-year due to
elevated promotional activity in the market, particularly online, and against
a very strong comparative of c.25% growth. For the full year, LFL sales were
up 4.2% with all regions ahead of the previous year with organic sales growth
of 8.4%.

We opened 215 new JD stores in the year, while the launch of our new JD Status
loyalty programme in the UK has been very encouraging to date with 800k
downloads so far.

Gross margin for the Group ended the year at 47.3%, down 50 basis points on
the previous year, due mainly to a higher mix of sales from Europe and North
America, where margins were impacted by the elevated promotional activity in
those markets. On the balance sheet, we are comfortable with our year-end
inventory level across the Group and we ended the year with over £1bn of net
cash.

UK/ROI

Q4 LFL sales were down 3.2%. There were two drivers of this: firstly, this
region has the highest apparel sales mix in the Group and apparel performance
was weaker than footwear; and secondly, we chose not to participate fully in
the significant, mainly online, promotional activity within the UK in Q4.
Organic sales were down 2.5%. For the full year, LFL sales were up 0.8% with
organic sales growth of 1.5%.

Europe

Q4 LFL sales were up 0.9%. Within the JD brand, stronger trading in Southern
Europe, driven by Portugal and Italy, was offset partially by weaker trading
in Northern Europe. This in part was due to a higher apparel mix in the north.
The impact of new store openings across Europe helped deliver Q4 organic
growth of 8.9%. For the full year, LFL sales were up 7.7% with organic sales
growth of 15.3%.

North America

Q4 LFL sales were up 2.1% against a previous year comparative of over 30%
growth, in what was a highly promotional market. New store openings drove
organic sales growth to 7.7%. For the full year, LFL sales were up 4.1% with
organic sales growth of 9.3%.

Asia Pacific

Q4 LFL sales were up 8.3% with contributions from all main markets and
particularly strong growth in New Zealand and Thailand. New store openings
delivered Q4 organic growth of 12.3%. For the full year, LFL sales were up
11.8% with organic sales growth of 17.7%.

Accounting Policy Changes

In line with the majority of large, UK-listed retail companies, we will
exclude the non-cash amortisation of acquired intangibles from our PBT before
adjusted items. This change will be implemented from FY25 and will increase
PBT by c.£55m per year. For the avoidance of doubt, we have set out below our
PBT guidance for FY25 on both a pre- and post-accounting change basis.

FY25 Guidance

Trading since the start of the new financial year has been in line with our
expectations. The market remains challenging due to less product innovation
and elevated promotional activity in key markets, particularly online. We
anticipate trading conditions will improve as we move through the year, helped
by a busy sporting summer, softer comparatives with last year from Q2 and an
improving product pipeline towards the end of the year. Given this, Q1 is
likely to be the softest LFL period of the year and H2 is likely to be
stronger than H1. In addition, cost inflation remains elevated, particularly
labour, and we will continue to invest in our infrastructure in FY25 to
deliver our long-term growth plan.

Guidance can be seen in the table below, split into both the old P&L
format, pre-accounting changes, and the new P&L format, post-accounting
changes.

 FY25 guidance                         Pre-accounting change basis  Post-accounting change basis
 LFL sales growth                      1-4%                         1-4%
 Organic sales growth                  6-9%                         6-9%
 Amortisation of acquired intangibles  c.£55m
 PBT                                   £900-980m                    £955-1035m

Key assumptions

1.     Low- to mid-single digit market growth

2.     Group to outperform market due to new store openings and the
annualisation of previous store openings

3.     No material impact from exchange rates

4.     A c.2% impact on total sales from disposals

5.     PBT impacted by a net c.£30m due to no 53(rd) week, the
non-trading of Sprinter/MIG stores as they convert to the JD brand and
incremental investment in cyber security and IT opex, partially offset by the
benefit from no longer incurring losses at SUR

New Segmentation and Reporting Cycle from FY25

We will introduce new segmentation from FY25, which will be used for reporting
initially at our Q2 trading update in August and then at our interim results
in September. As well as the FY24 preliminary results, which will be released
towards the end of May 2024, we will include a reconciliation to the new
segmentation for FY23 and FY24.

We are also introducing a more regular reporting cycle from FY25, as
highlighted in the financial calendar below. For FY25, we will report Q125 at
our full year results which, due to the increased level of review following
the arrival of a new Group CFO and a new auditor, are forecast to be announced
at the end of May. We will introduce a Q225 trading update in August, Q325
will be in November and Q425 will around the end of our financial year in
early 2025.

Analyst and Investor Call Details

Régis Schultz, CEO and Dominic Platt, CFO will host a live audio webcast and
Q&A for investors and analysts at 0900 GMT on 28 March 2024. This can be
accessed via https://brrmedia.news/JD_Q4. This will be available for playback
after the event.

Enquiries:

JD Sports Fashion Plc
 
                        Tel:  0161 767 1000

Régis Schultz, Chief Executive Officer

Dominic Platt, Chief Financial Officer

Mark Blythman, Director of Investor Relations

 

Advisors

Bank of America - Antonia Rowan
 
                Tel: 0207 628 1000

Peel Hunt LLP - Dan
Webster
Tel: 0207 418 8869

FGS Global - Rollo Head, Jenny Davey, James Thompson
                                           Tel: 0207 251
3801

FY25 financial calendar

End May 2024: FY24 results/Q125 trading update

End June 2024: AGM

August 2024: Q225 trading update

26 September 2024: H125 results

November 2024: Q325 trading update

January 2025: Q425 trading update

About JD Sports Fashion Plc

Founded in 1981, the JD Group ('JD') is a leading global omnichannel retailer
of Sports Fashion brands. JD provides customers with the latest exclusive
products from its strategic partnerships with the most-loved premium brands -
including Nike, Adidas and The North Face. The vision of JD is to inspire the
emerging generation of consumers through a connection to the universal culture
of sport, music and fashion. JD focuses on four strategic pillars: global
expansion focused on the JD brand first; leveraging complementary concepts;
moving beyond physical retail by creating a lifestyle ecosystem of relevant
products and services; and doing the best for its people, partners and
communities. JD is a constituent of the FTSE 100 index and had 3,313 stores
worldwide at 2 March 2024.

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