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JD Sports sprints higher as athleisure craze helps to drive record profits

JD Sports’ pre-tax profits jumped by almost a quarter to £294.5mln as the younger generations continue to splash their cash on Nike jogging bottoms and EA7 t-shirts
trackies and trainers
It is no longer considered a fashion faux-pas to be seen out and about in an Adidas tracksuit

Shares in JD Sports Fashion PLC (LON:JD) sprinted higher on Tuesday after the sportswear retailer turned a record profit last year.

JD, like rival Footasylum PLC (LON:FOOT) and US-listed peer Lululemon Athletica Inc (NASDAQ:LULU), is benefiting from the ‘athleisure’ craze – people wearing jogging bottoms, trainers and hoodies not to go to the gym but as a casual fashion statement.

READ: JD Sports to buy US firm Finish Line for US$558mln as part of global expansion

It is one part of the UK retail industry that seems to be holding up at the moment, with several other high street chains struggling as cash-strapped shoppers either move online or pull back on spending altogether.

The FTSE 250 group saw pre-tax profits jump to £294.5mln (2017: £238.4mln) in the 12 months ended February 3 – a rise of 24%, although that figure is boosted by the addition of a few days in this year’s financial year.

That was on revenues of £3.16bn, almost £800mln more than the £2.38bn it recorded last year.

Expanding international presence

Like-for-like sales – an important metric for retailers which strips out the impact of new and closed stores – rose 3%, while online sales soared by a third as shoppers continue to do more of their shopping over the internet.

JD is also making its mark outside of its home UK market, adding 56 more stores to its European portfolio last year, and nine more in the Asia Pacific.

Its presence abroad will increase once again this year thanks to its recent acquisition of US athletic footwear and apparel retailer Finish Line Inc (NASDAQ:FINL) last month for US$558mln.

‘Excellent’ results

“This is an excellent result demonstrating our capacity for continuing growth in both existing and new markets, and the strength of our offer in store and online,” said executive chairman Peter Cowgill.

“The investments we have made over a number of years in developing our multichannel proposition and driving improved buying, merchandising and retail discipline have ultimately led to the creation of a world class sports fashion business which combines the best of physical and digital retail on an increasingly global scale.”

Cowgill added: “We are very encouraged by the progress that we are making internationally and we continue to look for further opportunities to bring our dynamic multichannel proposition to new markets around the world with the support of our key brands.”

JD shares rose 6.5% to 375.9p shortly after the opening bell in the UK.

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