Can the US-eyeing JD Sport sprint higher following next Tuesday’s annual results?
Despite hitting an all-time peak of £4.62 pretty early on, the second half of 2018 actually saw the retailer pull back, ending December with a comparatively mild 5% increase year-on-year. That kind of frustrating performance has continued into 2018; though it has twice spiked towards £4, it fell quite sharply across March before finding itself at a 4 month low of £3.29 at the start of April. JD Sports Fashion PLC now sits at a current trading price of £3.48.
Not that JD Sports hasn’t been busy this year. January’s trading statement was full of good stuff, with the company upgrading its annual profit guidance for the second time in the space of 4 months after revealing that like-for-like sales growth had held at 3% in the back half of its financial year. JD Sports now expects pre-tax profit to come in at around £300 million – an impressive 26% increase, but a drop off from 2017’s remarkable 81% surge.
Even bigger than that update was the news that JD Sports was buying trainer supplier The Finish Line (NASDAQ:FINL) – which is actually 10% owned by JD’s bitter rival Sports Direct (LON:SPD) – for £400 million. The most notable aspect of the ‘transformational’ acquisition is the fact that The Finish Line is the ‘exclusive retailer, both in-store and online’ for mega-chain Macy’s, on top of having 550 stores of its own.
In terms of Tuesday’s results, JD Sports now needs to produce its previously promised pre-tax profit growth (of course, it’d be great if the company could nudge the figure even higher than £300 million). An update on The Finish Line situation will be welcome, especially since the firm said ‘completion is expected to take place no earlier than June 2018’.
JD Sports Fashion PLC (LON:JD) has a consensus rating of ‘Buy’ alongside an average target price of £4.93.
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