JD Sports set to become fourth British retailer ever to hit £1bn annual profits

JD Sports is poised to become the fourth UK retailer to make £1 billion in annual profits.

The self-proclaimed “King of Trainers” said it was on track to hit the milestone this year amid booming demand for sportswear.

This would see it join a select group comprising Tesco, Marks and Spencer and B&Q owner Kingfisher – the only other UK retailers to have racked up £1bn in profits in a single year.

The forecast followed upbeat updates from other High Street stalwarts, including bakery chain Greggs, suggesting consumer spending is holding up better than many feared.

Regis Schultz, CEO of JD, said low youth unemployment fueled demand for tracksuits and hoodies despite the rising cost of living, with Nike and Adidas items flying off the shelves.

“Our main customer target is a young adult and the young adult benefits from low unemployment,” he said. “They get jobs and they get to buy sneakers they love. That helps us enormously.’

The update underscores JD’s dramatic transformation into one of the UK’s most valuable retailers worth £8.4bn – a fraction behind Next at £8.5bn and more than twice as much as M&S at £3. 3 billion.

Retail analyst Wizz Selvey said: ‘This is a great achievement for a sports-focused retailer, comparable to those of M&S and Tesco whose basic and daily consumer goods have led them to such big profits.’

Despite the stellar profit prospects, JD shares fell 4.3 percent or 7.25 pence to 163 pence yesterday, despite being one of the most successful stocks on the FTSE 100 in recent years, up nearly 1800 percent over the past decade.

The drop in share price came as JD, which has 3,400 stores in 32 countries, reported a one-time hit to last year’s earnings.

The company said profits in the 12 months to January 28 were £440.9m, down from the £654m it earned last year after posting a one-off charge of £550.5m.

Without it, it would have made a profit of £991.4 million.

Revenues rose 18 per cent to £10.1bn, making it one of the few UK retailers to surpass £10bn in sales in a year.

Schultz, who replaced boss Peter Cowgill in September, said sales in the new fiscal year have been encouraging so far. “It’s the development of this particular part of the market between sports and fashion,” he told the BBC.

“You go out on the street and you look at what people are wearing and it’s sneakers. Ten years ago they were formal shoes. That’s what drives us.’

Despite bosses’ optimism, AJ Bell investment director Russ Mold said in yesterday’s results that “there was little to push the stock up.”

He added: ‘It is true that the company expects to cross the £1bn mark in terms of profit in the current financial year, but beyond this arbitrary milestone JD still has work to do and significant amounts to spend to deliver on its ambitious achieve growth objectives. .’

High demand for High St staples

JD Sports is just the latest business to show that the High Street is far from dead – and in many cases thriving.

The shares may have fallen 4.3 percent yesterday, but they’re still up 26 percent this year and nearly 1,800 percent over the past decade, making it more than twice as valuable as Marks & Spencer.

The self-proclaimed King of Trainers is not alone in his success. And while they may not have the glamor of luxury giants like Burberry, High Street baker Greggs and pub group JD Wetherspoon have also been posting bullish updates in recent days.

Spoons – as the chain of cheap boozers is affectionately known in the city – got the ball rolling last week as it celebrated its busiest Easter ever and best Saturday ever.

Greggs followed suit this week with sales up 17 percent amid seemingly insatiable demand for everything from old favorites like sausage rolls to its new Vegan Mexican Chicken-free Bake.

Greggs, now worth a palatable £2.8 billion, has seen his shares rise 13 per cent this year and nearly 600 per cent over the past decade.

Meanwhile, JD Wetherspoon is up 67 percent this year, making it a star performer of 2023, though it’s up just over 10 percent since 2013, having failed to recoup its Covid losses.

The success of these three stalwarts of the High Street – even in a cost-of-living crisis – underscores the resilience of the British consumer and the continued demand for well-priced staples such as sneakers, pies and pints.