JD Sports Set to Release Full-Year Results Amid Retail Uncertainty
JD Sports, the leading sportswear and fashion retailer, on Thursday, March 28th, should give an insight into the company's performance during a turbulent period for the retail sector.
JD Sports set to update investors on current uncertainty
JD Sports, the leading sportswear and fashion retailer, on Thursday, March 28th, should give an insight into the company's performance during a turbulent period for the retail sector.
JD Sports, often referred to as the "King of Trainers", has become a bellwether for the health of the high street. With celebrity endorsements from the likes of Rita Ora, the retailer has established itself as a go-to destination for athletic and casual fashion. Analysts forecast JD Sports will report record sales of £10.5 billion for the 12 months ending February 3rd, a 4% increase over the previous year.
However, there are concerns about the outlook for consumer spending and confidence in the UK retail market. In January, JD Sports issued a profit warning, citing unfavourable weather impacting sales of fleeces, pushback against price increases, and margin pressures in the US market. This warning, along with continued economic uncertainty related to Brexit and the cost-of-living crisis, has weighed on market sentiment toward the JD Sports share price, down around 29% year-to-date.
Adding to doubts was a recent profit warning from Nike, one of JD Sport's major brand partners. Nike announced lower sales expectations for 2024, sounding alarm bells across the sports apparel sector. As two leading athletic wear retailers, Nike and JD Sports have closely linked fortunes, and Nike's warning signals potential weakness ahead.
While the retailer continues expanding its store footprint under its CEO Régis Schultz's leadership, some analysts question whether the aggressive growth strategy will pay off in light of challenging market conditions. In January, Schultz revised down profit guidance for the 2018-19 financial year to between £915 million and £935 million, from initial estimates approaching £1.04 billion.
Investors will be paying close attention to any changes in guidance for the coming year which should provide greater clarity on trading conditions in the apparel sector and the impact of factors like last year’s high - albeit now steadily falling - inflation on consumer spending.
Many economists predict a pickup in UK retail sales starting this summer, with the Bank of England (BoE) expected to cut rates in June and economic uncertainty beginning to dissipate. But in the near term, JD Sports remains vulnerable to fluctuations in discretionary spending amidst an ongoing cost-of-living crisis squeezing British consumers.
Thursday’s planned update will reveal whether the challenges facing JD Sports and the wider retail sector are short-term blips or more ingrained struggles requiring strategic shifts. JD Sports has firmly established itself as the leading athletic fashion destination, but sustaining growth amidst market turbulence may prove a test for CEO Schultz.
Analyst ratings for JD Sports
Refinitiv data shows a consensus analyst rating of ‘buy’ for JD Sports with 4 strong buy, 8 buy, 2 hold and 1 sell – and a mean of estimates suggesting a long-term price target of 171 pence for the share, roughly 49% higher than the current price (as of 27 March 2024).
Technical outlook on the JD Sports share price
The JD Sports share price continues to hover above its mid-January and February lows at 105.85p to 103.00p, a fall through which would engage the May-to-June 2022 lows at 100.95p to 98.94p. Below this support zone lies the October 2022 trough at 88.40p.
JD Sports Weekly Candlestick Chart
The JD Sports share price continues to range trade between its mid-January-to-March boundaries between 103.00p and 123.60p, the break out of which will likely determine the medium-term trend.
JD Sports Daily Candlestick Chart
A rise and daily chart close above the 123.60p early-March high would push the 200-day simple moving average (SMA) at 136.72p to the fore. It sits within its early-January 155.05p to 134.75p price gap which may be closed in this scenario.
A fall through and daily chart close below the 103.00p February low would put the May-to-June 2022 lows at 100.95p to 98.94p on the map.
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