By James Davey
LONDON (Reuters) -JD Sports Fashion expects underlying profit to exceed 1 billion pounds ($1.3 billion) for the first time this year as demand for trainers, joggers and hoodies from its younger shoppers keeps growing.
JD (NASDAQ:JD) has proved resilient to the cost-of-living crisis, with many of its young consumers not yet burdened by household bills, while its relationships with Nike (NYSE:NKE) and Adidas (OTC:ADDYY) means shoppers get special access to the latest trends.
"Our key customer target is a young adult and the young adult all over the world is benefiting from low unemployment," CEO Régis Schultz told reporters.
He said trainers or sneakers were the "new normal" for footwear. "You see that in the street - 80% of shoes are sneakers, ten years ago it was formal shoes."
JD Sports shares, which have risen 30% this year, were down 6% in early afternoon trading.
Analysts said the drop in the share price was likely to be because there was no profit upgrade for 2023/24 from previous guidance. They also pointed to a charge for adjusted items of 550.5 million pounds, which dragged down JD's statutory pretax profit for 2022/23 to 440.9 million pounds.
The group, which trades from about 3,400 stores in 32 countries and online, is planning further expansion after underlying profit came in ahead of guidance for its last financial year, and as sales keep climbing.
Organic sales rose 12% in 2022/23 and were up over 15% in the first 13 weeks of its new financial year.
Schultz outlined plans in February to spend up to 3 billion pounds to open as many as 1,750 stores over five years, and said his aim was to turn JD into an athletic leisurewear "powerhouse".
Last week, JD said it had agreed to buy France's Groupe Courir for an enterprise value of 520 million euros. It has a growing exposure to the U.S. market and is also adding new stores in Italy, Germany and Spain.
For its financial year ending Jan 28, JD reported profit before tax and adjusted items of 991.4 million pounds, up from 947.2 million pounds in 2021-22. For 2023-24, it forecast 1.03 billion pounds, which if achieved would follow UK retailers Tesco (OTC:TSCDY), Marks & Spencer (OTC:MAKSY) and Kingfisher (LON:KGF) to the milestone.
The 550.5 million pound charge related to movement in the value of future put and call options held by minority shareholders in subsidiary businesses, and impairments and losses related to acquisitions and disposals.