JD Sports Fashion reports record interim results, group revenue of £5.0bn

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JD Sports Fashion Plc (LON:JD), the leading global retailer of sports, fashion and outdoor brands, has announced its interim results for the 26 weeks ended 3 August 2024 delivering continued strategic progress.

Commenting on the results, Régis Schultz, Chief Executive Officer of JD Sports Fashion Plc, said:

“We have today reported record interim results with Group revenue of £5.0bn, and Profit before tax and adjusting items of £405.6m, underscoring our ability to outperform the sector in a volatile global marketplace. Our success is a direct reflection of the strength and agility of our global, multi-brand strategy, which allows us to adapt swiftly to fast-changing industry trends across the world, and our operational excellence. This ensures we continue to deliver an industry-leading customer proposition both in store and online.

“Organic sales growth in the first half was 6.4% and our underlying operating margins were in line with last year, notwithstanding continued cost investment in our long-term growth. We are reiterating our previous Profit before tax and adjusting items guidance range of £955-1,035m.

“Our acquisition of Hibbett, Inc., which completed just before the period end, is a key milestone in our international development and advances the global nature of the Group through our strengthened position in the US. I remain confident in the delivery of our exciting growth plans for North America and that the Group is well positioned to continue growing share in the world’s largest sportswear market.

“I am very proud of our teams across the globe, whose dedication and hard work have been instrumental in achieving these results. Our strong business model and clear strategy position us to deliver long-term growth and value creation for our shareholders.”

Key H1 Achievements

· Proven strength and agility of our multi-brand model. In a global sportswear market benefiting from long-term structural growth, we continued to outperform the sector in H1. Organic sales growth* was 6.4% with like-for-like (LFL) sales growth* of 0.7%. Group revenues were up 5.2% to £5.0bn and up 6.8% in constant currency*. Profit before tax and adjusting items* was £405.6m with statutory reported Profit before tax of £126.3m. Good progress was made across our three core segments: JD, Complementary Concepts and Sporting Goods & Outdoor.

· Focus on operational excellence. We continue to invest in the foundations for future growth including across people, distribution and governance. In a volatile market, and excluding Hibbett, gross margin was down 10 basis points (bps), while our operating margin was in line with the prior period at 8.8%. This reflects our operating discipline in a highly promotional environment, together with strong cost control and good inventory management.

· Growing global presence. We continued to deliver on our strategy to expand the JD fascia and roll out complementary concepts for a wider range of customers globally. During the period, the Group completed the acquisition of Hibbett, adding material scale and presence in North America, which is already our largest region by revenue and post-acquisition would represent around 40% of pro-forma annualised group revenue.

· Balance sheet strength. We generate significant cash from operations in a financial year and our balance sheet strength allows us to invest capital in our organic growth*, to pursue value enhancing acquisitions and to finance the buyout of non-controlling interests (NCI).

Performance Summary

£m	26w to 3 August 2024	26w to 29 July 2023	Change	Constant currency change
Revenue	5,032.2	4,783.9	5.2%	6.8%
Gross margin	48.2%	48.4%	(20) bps
Operating profit before adjusting items*	451.1	422.7	6.7%	8.3%
Operating margin before adjusting items*	9.0%	8.8%	20 bps
Profit before tax and adjusting items*	405.6	397.8	2.0%	3.4%
*Adjusted basic earnings per share (p)**	5.15	4.93	4.5%
Net (debt)/cash before lease liabilities* at period end	40.8	1,276.5	(96.8)%
Statutory measures
Revenue	5,032.2	4,783.9	5.2%	6.8%
Operating profit	292.2	374.8	(22.0)%
Net financial expense	(45.5)	(24.9)	(82.7)%
Profit before tax	126.3	353.7	(64.3)%
Basic earnings per share (p)	0.42	4.23	(90.1)%
Dividend per share (p)	0.33	0.30	10%

¹Explanations for restating numbers for the 26w to 29 July 2023 can be found in note 14 to the Consolidated Financial Statements

Throughout this release,’*’ indicates the use of Alternative Performance Measures. Please refer to the Alternatives Performance Measures section for the further information including reconciliations to statutory measures.

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Strategic Highlights

Continued strong progress across our four key strategic pillars: –

· JD Brand First: rolling out our no.1 fascia

o Double-digit organic growth* across Europe, North America and Asia Pacific

o Opened 83 new JD stores, including the largest ever JD store in Stratford, London in April, and on track to open around 200 new JD stores in the full year

o Transferred an additional 19 stores to JD from Finish Line in the US, MIG in Eastern Europe and ISRG in Iberia

· Complementary Concepts: delivering scale and customer reach

o Completed acquisition of Hibbett, Inc. adding material scale and presence in North America, through its 1,179 stores in southeastern USA

o Completion of the Courir acquisition remains subject to clearance from the European Commission

o 3.4% LFL sales growth* from our existing US community fascias and 4.5% LFL sales growth* from our Sporting Goods fascias

· Beyond Physical Retail: enhanced platform for long-term growth

o Good progress on Omnichannel: ‘ship from store’ rolling out across Europe and successful ‘click and collect’ trial in France

o Strong uptake in the JD STATUS loyalty programme in the UK following its full launch in December 2023 with 1.4m active members so far; STATUS also launched in France and Poland

o Supply chain evolution continued: Heerlen operating manually with automation now anticipated in 2025 and rationalising UK operations around Kingsway, leading to the announced Derby closure

· People, Partners & Communities: being the best we can be

o First global partner of the Nike Connected programme following US launch: demonstrates strength of our long-term brand relationship

o Expanded community outreach through the JD Foundation, hosting our first “JD UP” careers event in Manchester reaching 2,500 young people with plans to roll out further

o 26% reduction in Scope 3 emissions on purchased goods

Financial Highlights

· 4,506 stores, up 1,189 from the start of the year, reflecting store openings, ongoing disposal of non-core stores and the Hibbett acquisition

· Organic sales growth* of 6.4% and LFL growth* of 0.7%

· Revenue growth of 5.2% to £5,032.2m, including £61m from 10 days of Hibbett trading

· Gross margin of 48.2%, or 48.3% excluding Hibbett, which was down 10bps on the prior period, driven by lower Q2 margin from elevated promotional activity across apparel and online

· Operating margin before adjusting items* of 9.0%, or 8.8% excluding Hibbett, which was in line with the prior period; good cost control offsetting future growth investment

· Profit before tax and adjusting items* of £405.6m was up 2.0%, up 3.4% on a constant currency basis and flat excluding Hibbett

· Profit before tax of £126.3m reflecting mainly non-cash adjusting items including updated Genesis put and call option valuation following the acquisition of Hibbett and the closure of the Derby distribution centre (DC)

· Adjusted basic earnings per share* up 4.5%

· Continued balance sheet strength; net cash before lease liabilities* of £40.8m, after stores investment and the acquisitions of the ISRG/MIG NCIs and Hibbett

· Proposed interim dividend of 0.33p, up 10% on the prior period

Outlook and Guidance

Our trading performance in the first half was in line with our expectations and our overall guidance range of £955-1,035m remains unchanged. As highlighted at our Q225 trading update, we are experiencing currency headwinds this year as the pound strengthens against the US Dollar and the Euro. Our guidance range of £955-1,035m was based on certain exchange rates¹. Foreign exchange impacts reduced Profit before tax and adjusting items* by £6m in H1 and, at current rates², we expect the H2 impact to be £20m. We expect Hibbett to contribute c.£25m Profit before tax and adjusting items* in the full year, reflecting the business contribution from completion, acquisition accounting adjustments and a £25m interest cost from the new acquisition facility.

¹The £955-£1,035m guidance range was based on 1.25 for the US Dollar and 1.15 for the Euro

²Current rates used are 1.34 for the US Dollar and 1.20 for the Euro. In terms of impacts on H2 profit, every one US cent is worth £1.7m of Profit before tax and adjusting items* and every one Euro cent is worth £1.0m of Profit before tax and adjusting items*.

Results Meeting and Webcast

Our results presentation will be held in person at Peel Hunt, 100 Liverpool Street London EC2M 2AT and webcast live at 9:00 (BST) today. To register for the webcast, please visit the following link: https://app.webinar.net/VyQZb2rb25w.

Downloadable materials will also be available on the Investor Relations section of the Company website: Results Centre | JD SportsFashion (jdplc.com) A replay will be made available shortly after the event concludes on the same link, followed by a transcript of the event.