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(Sharecast News) - JD Sports surged on Wednesday as it said that full-year profits were set to be in line with previous guidance and announced the launch of a £100m share buyback.
The company said trading to the end of March has been as it expected. For FY25, the group expects organic revenue growth of 5.8% and profit before tax and adjusting items in line with January guidance of £915m to £935m.
For FY26, JD expects profit before tax and adjusting items in line with consensus expectations of between £878m and £982m, but this excludes any potential impact from changes to tariffs.
The retailer said fourth-quarter like-for-like revenue growth was 0.3% in "a challenging market", with organic revenue growth of 5.6%, driven by a strong performance in Europe.
For the full year, LFL revenue growth was also 0.3%, in line with the company's previous guidance of broadly flat, with organic growth of 5.8%, slightly ahead of its previous guidance. This was put down to strong growth from North America, Europe and Asia Pacific.
JD said it expects the trading environment in its key markets to be volatile throughout the year.
"We note the proposed changes to tariffs announced last week. At this stage, the outcome of these developments is uncertain. We are in regular dialogue with our brand partners but it is too early to comment on the potential sector impact," it said.
In a separate statement outlining its medium-term plans, JD Sports announced the launch of an initial £100m share buyback programme and said capital expenditure was set to trend from 5% to 3-3.5% of revenue, reflecting the end of its heightened investment phase.
Chief executive Régis Schultz said: "JD operates within an attractive, long-term growth market and we are well positioned to continue growing market share. We have strong brand partner relationships and an agile, multi-brand model which allows us to drive, and respond quickly to, market trends. We are highly cash generative and disciplined in terms of our capital allocation opportunities.
"We have made significant strategic progress over the last two years: we have accelerated the growth of the JD brand, particularly in North America and Europe; we have continued building a global sports fashion powerhouse through the acquisitions of Hibbett and Courir, taking full ownership of ISRG in Iberia and MIG in Eastern Europe, and disposing of around 30 non-core businesses; we have upgraded our global supply chain; and we have built the required infrastructure and governance for a group of our scale.
"Reflecting slower market growth and the investments we have made in our supply chain and infrastructure, we are updating our medium-term plans to capitalise on our organic growth opportunities in North America and Europe, deliver productivity and efficiency benefits from the investments and utilise our strong cash generation to deliver improved returns for our shareholders."
At 1355 BST, the shares were up 8.3% at 68.42p.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "JD Sports investors breathed a sigh of relief as full-year organic sales growth landed in line with market expectations. A string of weak sales and profit downgrades in recent times means that simply meeting expectations is viewed as a win, and it was enough to send the shares more than 10% higher shortly after the announcement.
"The group's acquisition of Hibbett in the US, and Courir in France, brought nearly 1,500 new stores into the fold. That's expected to sharpen the group's proposition overseas and help offset some weakness on home soil as management retained its cautious tone for the UK market. With National Insurance and minimum wage increases now in play and pushing up costs, the focus here remains very much on streamlining operations and improving productivity, rather than driving sales growth.
"There's also the elephant in the room - tariffs. The Hibbett acquisition means that the US is now JD Sports' largest region by sales. Many sports goods are manufactured in countries like Vietnam and China. Given that President Trump's tariffs have heavily targeted these regions, the cost of goods produced there and brought into the US is expected to rise. JD's guidance for profits to remain broadly flat this year excludes the impact of these recent tariffs, meaning there's serious scope for guidance to be downgraded as the year progresses."
