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21 Nov 2024
Q3 sales first take: at the lower end

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Q3 sales first take: at the lower end
JD Sports Fashion Plc (JD:LON) | 80.6 0 (-0.1%) | Mkt Cap: 4,137m
- Published:
21 Nov 2024 -
Author:
Okines Warwick WO -
Pages:
9 -
Q3 sales: what happened?
JD Sports'' Q3 sales are below expectations principally due to soft October trading and despite gross margin expansion. Group LFL sales were -0.3%. Management guides full year Feb-25 Group Adj. PBT to the lower end of its GBP 955-1,035m range, implying c.3% consensus downgrades, despite an improvement in currency rates.
BNPP Exane View: at the lower end
The weak share price has been indicating investor nervousness that JD Sports Q3 sales would be below sell-side expectations, which we think were +2% to +3% despite there being no comprehensive consensus available. We had forecast +2.3% and today the company reports -0.3%. The UK, North America and Asia Pacific were all soft. Gross margins were +0.3% as JD kept discipline in a promotional environment. We suspect the market was anticipating some drift of consensus profits, but with continued negative earnings momentum the shares could start down a touch.
Likely direction of consensus
FY Feb-25 Group Adj. PBT consensus sits at GBP 984m, per Visible Alpha. Today the company guides ''at the lower end'' of this guidance, despite a GBP c.10m improvement in currency rates since last reported. Hence, we expect consensus to trim by c.3% today.
Anticipated market reaction
JD Sports shares are -32% YTD (versus FTSE 100 Index +5%, FTSE 350 Retail Index -2%). Bulls will point to margin discipline and a fairly modest downgrade; Bears will point to the deterioration of sales through the quarter, continued negative EPS momentum and all this despite the stronger US dollar. We expect the shares to open down a touch.
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Conference call at 09:30 UK / 10:30 CET. Registration is here.
Valuation
JD Sports trades on CY24 P/E of 8.8x and CY25 P/E of 7.9x (at GBp 113, on our forecasts).
Main points from Q3 sales
. Q3 sales: JD Sports'' Q3 group LFL sales growth of -0.3% was below our expectations (+2.3%). The contribution from new organic space was +570bps (BNPP Exane...