By Sarah Young
LONDON (Reuters) – JD Sports expects young shoppers not yet saddled with household bills to defy the economic gloom and keep buying Nike trainers and other sportswear, after it posted bumper Christmas sales.
The British retailer, which sold 2.6 million pairs of Nike Air Force 1 shoes in the last three months of 2022, forecast higher profits for its current financial year and next, after revenue growth of over 20% in the Christmas period.
The upbeat outlook contrasts with retailers across Europe, such as British clothing chain Next, which are bracing for a tougher 2023 as the surging cost of energy, food and housing leave shoppers with less to spend.
“I think that the buying power of our customer is much higher than it used to be,” Chief Executive Régis Schultz told reporters, referring to the typically younger JD shoppers.
“They don’t have the utility and the rent or the mortgage to pay.”
Encouragingly for other retailers, the group also said supply issues, freight costs and inflation were all normalising, which it expects to support profitability.
The outlook lifted shares in FTSE 100 company 7% to 151 pence, their highest for nine months.
JD said revenue growth over the autumn and winter was 10%, versus around 5% earlier in the year, helped by improving stock availability in the United States, which accounts for about 30% of its sales.
European stores account for over 30% of JD’s sales, a bigger portion than JD’s home market of Britain, and the company was seeing strong numbers in France, Spain and Italy, Schultz said.
Schultz took over as CEO in September, following a tumultuous period that culminated in the ousting of long-standing executive chairman Peter Cowgill in May.
JD’s market value of 7 billion pounds ($8.5 billion) is more than twice that of Marks & Spencer’s 3 billion pounds and higher too than Sainsbury’s – two stalwarts of British retailing.
For the 12 months to the end of January, it expects profit before tax and exceptional items at the top end of a forecast range of 933-985 million pounds.
It sees profits for the year to January 2024 topping 1 billion pounds.
($1 = 0.8220 pounds)
(Reporting by Sarah Young Editing by Kate Holton and Mark Potter)