H1 stronger than expected, especially in the context of higher-than-expected Outdoor losses. Group PBT before exceptions & IFRS 16 was £166.2m (+36% or +30% incl. IFRS 16) driven mainly by (1) Global Sports Fashion fascias LFLs +12%; (2) 5% yoy JD space growth; and (3) annualisation of the US acquisition. Year-end net cash was £118m, an impressive yoy increase of c.£200m.
UK core sports fascias delivered an eye-catching ‘more than 10%’ LFL sales growth incl. online against the backdrop of a challenging UK retail environment.
Strong European momentum continues with JD’s LFL sales up c.20%. The integration of Sport Zone is approaching completion, with the loss reduced to £4.1m (LY H1 loss c.£10m). A net 23 stores opened in H1.
US performance pleasing with integration on track. 1H LFL sales in-store +3% (against tough clearance comps), with double-digit online growth and gross margin +50bps. JD now has 6 JD stores with the first flagship due to open in 2020 (Time Square) and is making progress in closing loss-making stores.
Outdoor results disappointing. H1 losses increased to £18.2m (LY loss £3.8m). Variation in weather comps meant sales were volatile. Blacks & Tiso 1H LFLs were +3% after Q2 sales recovered strongly. Go Outdoors struggled (higher exposure to camping) and suffered short-term distribution issues.
Upgrade FY20e/FY21e PBT by 5% pre IFRS 16 adjustment which assumes H2 c.12% profit growth. Post IRFS 16 adjustment, the PBT upgrade is c.1.5%. Management guides to FY profits at the top end of £402m-£424m market consensus range pre IFRS 16 or the mid-point post IFRS 16 adjustment.
