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JD Sports shares surge on Q4 sales, steady profit outlook

Published 03/29/2024, 05:30 AM

On Thursday, BTIG maintained a Neutral stance on Foot Locker (NYSE:FL), without altering the previous price target. This decision aligns with market reactions to JD (NASDAQ:JD) Sports' latest trading update. JD Sports (JD-LON), which has not been rated by BTIG, saw its shares climb approximately 15% following its pre-announcement that indicated fourth-quarter sales were on par with expectations and the profit outlook remained unchanged. However, forecasts for fiscal year 2025 were slightly lower than consensus.

The UK-based sports-fashion retailer reported that for the fourth quarter, which ended in January, organic revenue growth was at 4.4%, with like-for-like sales marginally increasing by 0.1%. The North American market showed strength with a 2.1% rise in like-for-like sales, contrasting with the UK's weaker performance, which saw a 3.2% decline.

JD Sports also noted a 50 basis points drop in gross margin over the year, attributing it to heightened promotional activities in North America and Europe. Despite this, the company's start to the new fiscal year matched expectations. Management anticipates like-for-like sales growth between 1% and 4% and organic revenue growth of 6% to 9% for fiscal year 2025. Nonetheless, the projected profits of £900 million to £980 million, prior to accounting adjustments, are estimated to be about 5% below the consensus.

The company expressed confidence in their inventory position at the year's end, suggesting they are well-prepared to navigate the upcoming fiscal year. The update from JD Sports provides a snapshot of the current retail landscape, particularly in the sports-fashion segment, and could offer insights into the broader market's performance.

InvestingPro Insights

As Foot Locker navigates a challenging retail environment, a glance at real-time data from InvestingPro reveals a mixed financial picture. The company operates with a notable debt burden, a factor that investors should consider, especially when evaluating long-term sustainability. However, there's a silver lining with the company's high shareholder yield and expectations of net income growth this year, which could signal a turnaround for investors looking for growth opportunities.

InvestingPro Data shows that Foot Locker has experienced a significant return over the last week, with a 20.5% price total return, and a large price uptick over the last six months, indicating a 71.37% price total return. This volatility is reflected in the stock's high price volatility, a characteristic that traders might exploit. Despite recent gains, the company's stock has fared poorly over the last month and year, with price total returns of -16.39% and -25.51%, respectively.

For a more comprehensive understanding of Foot Locker's prospects, consider the additional 14 InvestingPro Tips available. These insights could help inform investment decisions, especially in the context of recent analyst earnings revisions and the company's profitability outlook. To access these tips and more, visit https://www.investing.com/pro/FL and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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