JD Sports Q3 Performance Driven by Store expansions

3 min read | November 21, 2024 03:31 AM EST | By Team Kalkine Media

JD Sports Q3 Performance Driven by Store expansions — Image source: shutterstock

Strong Start, Weaker Finish

The period began with a robust back-to-school season, but momentum waned as October saw softer consumer demand. This was attributed to unseasonable weather, increased promotional activity, and cautious spending, particularly in the United States, where pre-election economic uncertainty suppressed demand.

Despite these headwinds, JD Sports focused on maintaining operating discipline and pursuing its long-term commercial strategy. This approach resulted in a 0.3 percentage point increase in the gross margin to 48.1%, with year-to-date margins holding steady at 48.2%.

Sales Trends and Regional Performance

The retailer achieved a 5.4% organic sales growth in Q3, supported by its ongoing store rollout program. Year-to-date, organic sales growth stands at 6.1%. However, like-for-like (LFL) sales for Q3 dipped by 0.3%, reflecting a sharp contrast between a strong August-September and a weaker October. On a year-to-date basis, LFL sales showed modest growth of 0.5%.

Regionally, Europe emerged as a bright spot with growth in both LFL and organic sales, while trading in other regions, including the U.S., remained softer. Notably, physical stores outperformed online sales during the quarter, and footwear sales outpaced apparel.

Strategic Expansion and Acquisitions

The company's expansion strategy remained a highlight, with 79 new JD stores opened during Q3, bringing the total for 2024 so far to 181. This boosted the retailer’s global footprint to 4,541 stores, a significant increase from the year’s start, including 1,179 outlets acquired through the Hibbett acquisition.

JD Sports also made progress toward acquiring Courir, a female-focused sports fashion brand. With regulatory approvals secured, the transaction is expected to finalize soon, further diversifying JD Sports’ portfolio.

Profit Guidance Revised

Given the challenging trading environment, JD Sports revised its full-year profit forecast. The company now anticipates profit before tax and adjusting items (PBT) to fall at the lower end of its original guidance range of £955-1,035 million. The forecast includes a £25 million contribution from Hibbett, while currency fluctuations are expected to reduce PBT by £15 million.

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