JD Sports is poised to become just the fourth British retailer to make £1billion in annual profits.
The self-styled ‘King of Trainers’ said it was on course to reach the milestone this year amid booming demand for athleisure clothing.
This would see it join a select group made up of Tesco, Marks and Spencer and B&Q owner Kingfisher – the only other UK retailers to have raked in £1billion in profits in a single year.
The forecast followed upbeat updates from other High Street stalwarts including bakery chain Greggs – suggesting consumer spending is holding up better than many feared.
Big name brands: Love Island presenter Maya Jama poses for a recent ad campaign for JD Sports which is poised to hit £1bn in annual profits
JD chief executive Regis Schultz said low unemployment among the young was driving demand for tracksuits and hoodies despite the rising cost of living, with Nike and Adidas goods flying off the shelves.
‘Our key customer target is a young adult and the young adult is benefiting from low unemployment,’ he said. ‘They get jobs and they can buy sneakers they love. That’s really helping us a lot.’
The update underlines JD’s dramatic transformation into one of Britain’s most valuable retailers worth £8.4billion – a fraction behind Next at £8.5billion and more than twice as much as M&S at £3.3billion.
Retail analyst Wizz Selvey said: ‘This is an amazing achievement for a sport-focused retailer, matching the likes of M&S and Tesco whose staple and everyday consumables have led them to such large profits.’
Despite the bumper profits outlook, JD shares fell 4.3 per cent, or 7.25p, to 163p yesterday, though it is one of the most successful stocks on the FTSE 100 in recent years, up nearly 1800 per cent in the past decade.
The share price slide came as JD, which has 3,400 stores in 32 countries, reported a one-off hit to earnings for last year.
The company said profits came in at £440.9million in the 12 months to January 28, lower than the £654million it made the previous year after it booked a one-off charge of £550.5million.
Without that, it would have made a profit of £991.4million.
Revenues jumped 18 per cent to £10.1billion – making it one of just a handful of British retailers to top £10billion of sales in a year.
Schultz, who replaced boss Peter Cowgill in September, said sales had been encouraging in the new financial year so far. ‘It’s the development of this specific part of the market between sport and fashion,’ he told the BBC.
‘You go in the street and you look at what people are wearing and it’s sneakers. Ten years ago it was formal shoes. That is driving us.’
Despite the optimism from bosses, AJ Bell investment director Russ Mould said ‘there was little to get the stock moving upwards’ in yesterday’s results.
He added: ‘True, the company does expect to exceed the £1billion mark in terms of profit in the current financial year but, beyond this arbitrary milestone, JD still has work to do and considerable sums to spend to meet its ambitious goals for growth.’
High St staples in demand
JD Sports is just the latest firm to show that the High Street is far from dead – and in many cases thriving.
The shares may have slipped 4.3 per cent yesterday but they are still up 26 per cent this year and almost 1800 per cent in the past decade, making it more than twice as valuable as Marks & Spencer.
The self-styled King of Trainers is not alone in its success. And while they may not have the glamour of luxury giants such as Burberry, High Street baker Greggs and pub group JD Wetherspoon have also posted bullish updates in recent days.
Spoons – as the chain of cut-price boozers is affectionately known in the City – set the ball rolling last week as it celebrated its busiest ever Easter and best ever Saturday.
Greggs followed suit this week with a 17 per cent jump in sales amid seemingly insatiable demand for everything from old favourites such as sausage rolls to its new Vegan Mexican Chicken-free Bake.
Greggs, now worth a tasty £2.8billion, has seen its shares rise 13 per cent this year and nearly 600 per cent over the past decade.
JD Wetherspoon, meanwhile, is up 67 per cent this year, making it a star performer of 2023, though it is up little more than 10 per cent since 2013 having failed to claw back its Covid losses.
The success of these three High Street stalwarts – even in a cost of living crisis – underline the resilience of the British consumer and ongoing demand for well-priced staples such as trainers, pies and pints.
