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JD Sports shares tumbled on Friday morning after the retailer revealed a dip in profits, despite the group boasting a ‘strong performance in a challenging market’.
The sports fashion retailer’s revenues ticked 2.7 per cent higher to £10.4billion in the year to 27 January, while organic like-for-like sales grew 3.8 per cent.
JD Sports said it had been helped by the disposal of five brands – Tessuti, Scotts, Choice, Giulio and Cricket – all of which were sold to Frasers Group, as well as receiving a boost from the opening of over 200 new stores.
Challenging market: JD Sports said its sales had been resilient despite headwinds
Shares in JD Sports were down 10.3 per cent to 120p on Friday morning.
Over the same period, JD also announced the proposed acquisitions of French brand Courir and American retailer Hibbett.
However, its UK business took a hit from the disposals and was the only region not to grow revenue over the year, with sales down 8.3 per cent to £3.51billion.
Footwear continued to perform strongly with sales growth of 8.2 per cent to £5.92billion, which helped to offset a fall in demand for autumn and winter apparel amid the milder weather.
Pre-tax profit before adjusting items was down 7.5 per cent to £917.2million, which JD Sports said reflected ‘continued investment in people, stores, systems and supply chain’.
The retailer said that it was lower than anticipated thanks to lower revenue in the second half of the year and investments for future growth.
Chief executive Regis Schultz said: ‘We have started the new financial year with Q1 in line with our expectations in a volatile market and we are on track to deliver our profit guidance for the full year.
‘Looking further ahead, we have a strong business model and a clear strategy to deliver long-term growth and value creation for our shareholders.’
The retailer proposed a final dividend of 0.6p, bringing its total proposed payout to 0.9p.
Peel Hunt analysts said the first quarter was ‘always likely to be the weakest quarter, and with some product innovation emerging, the balance of the year should be more positive’.
They added: ‘There is nothing in the prelims to put off a marginal buyer… Even after a minor run, the shares continue to reflect bad rather than good news ahead, and that, in our view, offers a very good opportunity.’
