JD Sports shares soar to new highs

Bloomberg

JD Sports Fashion Plc shares soared to new highs after the U.K. sportswear retailer extended its record of confounding analysts’ expectations, helped by flourishing partnerships with suppliers including Nike Inc. and Adidas AG.
The stock rose as much as 10 percent in London after the company reported an 81 percent jump in annual pretax profit to 244.8 million pounds ($303.9 million).
Against a backdrop of job losses and bankruptcies in the rest of Britain’s retail sector, JD has found itself in a sweet spot. Stocking exclusive ranges from the likes of Adidas and Nike, JD has attracted growing numbers of fashion-savvy customers, leaving main competitor Sports Direct International Plc trailing in its wake. Now, the company is extending the formula to the rest of the world, adding stores from Spain to Australia.
“JD is a retailer with an outstanding and well-defined proposition,” Shore Capital analysts said in a note.
The growing popularity of sneakers and smart casual clothing has played to JD’s strengths.
“Social media is driving a continuing move towards a more casual, more cosmopolitan lifestyle across the U.K. and we’re well positioned to take advantage,” Executive Chairman Peter Cowgill said by phone. “It’s a cultural change that’s here to stay.”
The retailer has tapped into that by securing exclusivity on the latest lines from the likes of Under Armour and Puma, who value the store environment and high quality presentation that JD provides, Cowgill said.
“Whilst the trainer trend tailwind has been off the Beaufort scale, JD has sailed it skilfully,” said Peel Hunt analyst Jonathan Pritchard. “The results are an example of what the right product, well merchandised can achieve in the current environment.”
The company expects inflationary pressures arising from Britain’s Brexit vote to take hold in the latter part of 2017, although the majority of price increases on the latest sneakers are driven by technical improvements, rather than a drop in sterling, Cowgill said.