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JD Sports Reports Increase in Organic Sales Amid Tariff Concerns
Shares in JD Sports experienced a surge on Wednesday as the sportswear retailer announced encouraging organic sales growth, meeting market forecasts and providing respite after a period of underperformance and profit revisions. The latest financial results indicate a positive trajectory for the company, despite looming concerns over potential US tariffs.
Positive Sales Growth
The high street chain disclosed that its organic sales expanded by 5.8% in the fiscal year concluding on February 1st. This figure slightly surpassed their January guidance, which projected an approximate 5% increase.
- Overall organic revenue climbed 5.8% year-on-year.
Regional Performance Highlights
The retailer demonstrated robust growth across various geographical regions:
- Europe: Experienced a substantial 10.5% surge in organic turnover.
- Asia-Pacific: Noted a significant 9.5% rise in organic turnover.
- North America: Registered a healthy 7.5% growth in organic turnover.
Profitability Outlook Confirmed
JD Sports also stated that trading at Hibbett, based in Alabama, and Courir, a French footwear vendor—both acquired during the past year—aligned with internal projections. Consequently, the company anticipates its annual pre-tax profits to fall within the previously communicated range of £915 million to £935 million.
Exposure to US Tariffs
However, the United States now accounts for nearly 40% of JD Sports’ total sales, making the group significantly vulnerable to potential new tariffs. This guidance did not factor in the potential impact of these tariffs.
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Strong Growth: The sports retailer reported a 5.8% increase in organic sales for the year ending February 1st.
Future Revenue Growth Strategy
Looking ahead, JD Sports projects continued revenue expansion in the current financial year. Recent acquisitions are expected to contribute approximately a 10% uplift, while newly established retail spaces are anticipated to provide an additional 4% boost.
The acquisitions of Hibbett and Courir, representing a combined investment of £1.3 billion, have expanded JD Sports’ portfolio by almost 1,500 stores.
Earnings Expectations and Tariff Impact
The Bury-headquartered business further indicated that earnings are expected to meet consensus forecasts of £920 million, although this projection excludes any potential adverse effects stemming from tariff policies.
JD Sports sources a significant portion of its merchandise from third-party brands with manufacturing operations in Asia—particularly China, Cambodia, and Vietnam—countries likely to be significantly affected by tariffs. Products originating from these countries and imported into the US may face substantial levies.
Expansion in the US Market
JD Sports entered the American sportswear market in 2018 with the acquisition of Finish Line for $558 million in cash. Since then, the company has increased its US presence through further acquisitions, including Shoe Palace, DTLR (based in Baltimore), and Hibbett in July 2024. These strategic moves have established the US as JD Sports’ largest market in terms of sales volume.
Strategic Progress and Expansion
The Pentland Group, the majority owner of JD Sports, also reported ‘significant progress’ in its medium-term strategic initiatives. Over the past two years, JD Sports has inaugurated approximately 400 new stores worldwide, launched new distribution centers in Australia, the US, and the Netherlands, and divested around 30 non-core businesses.
CEO’s Perspective
Régis Schultz, Chief Executive of JD Sports, commented that the business ‘operates within an attractive, long-term growth market, and we are well positioned to continue growing market share. We have strong brand partner relationships and an agile, multi-brand model which allows us to drive, and respond quickly to, market trends.’
Market Reaction and Analyst Commentary
JD Sports shares became the top performers on the FTSE 100 in late Wednesday trading, climbing 10% to 69.5p.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, noted: ‘JD Sports investors breathed a sigh of relief as full-year organic sales growth landed in line with market expectations. After a series of disappointing sales figures and profit downgrades recently, simply meeting expectations is perceived positively.’
Chiekrie further commented on tariff concerns: ‘There’s also the elephant in the room – tariffs. The Hibbett acquisition has positioned the US as JD Sports’ largest market by sales. Given the prevalence of sports goods manufacturing in regions like Vietnam and China, and President Trump’s tariff policies targeting these areas, import costs for goods entering the US are anticipated to increase. JD’s profit guidance remaining largely unchanged for the year ahead excludes the impact of these tariffs, suggesting potential future downgrades as the year progresses.’