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The 12 month performance doesn't matter really, still a company worth as much as JD in terms of market cap but making half as much profits, with more cash at hand and higher net asset.
Burberry slashed the outlook by 25% shares drop 7% (so far). JD lowered its figure by 10%, shares dropped 25-30%.
Burberry is a much weaker business. Their offering is much more niche and undiversified.
The positive is that it appears that what is perceived more "premium" and unnecessary has been deprioritized by shoppers, it is a general trend and not a specific problem concerning JD only.
The day you plant the seed is not the day you eat the fruit.
FALCONER-FLYER 10bn earnings?
Reg. Bigmac69's statement.
don't you find it strange how revenue did not increase considerably (maybe 20% higher) from 2020 to 2021 yet the profit jumped to almost twice as much. Is this just accounting work or something extraordinary happened with gross margins?
The difference from 2020 to 2021 is not so extraordinary if you look at statutory earnings, rather than the adjusted.
Any thoughts?
The share price is ridiculously low. The CEO should buy, if he doesn't it means he's either hiding something or he is broke.
PSK yes if you wait for a couple of years perhaps lol
'Outperform' with a target of 150p. Does this mean the view is for a downtrend in the athleisure sector and JD is expected to fare better than competitors? Does a forecast of 150p implies forecast earnings of £650mln with a PE of 12? That is quite a conservatives PE, retail apparel trades on an average of 14.. which means 150p equates £530mln forecast earnings. Just over half of the previous estimate of £1 billion PBT. How bad can it get for JD? This is absurdity to me... But I have been unpleasantly wrong a few times now!
I am reading at the trading update again and I cannot see anything particularly bleak:
Positives:
- Constant currency organic revenue growth was 6.0% with like-for-like growth of 1.8%.
- Full year organic revenue growth to be c.8%.
- The gross margin rate for the period is in line with last year - This is still very decent and I am afraid overlooked by the market.
Unclear:
- Reclassification of certain capital expenditures into operating expenses
- Previously announced dual running infrastructure costs.
Negatives:
- Lower interest income of £8m following the ISRG NCI acquisition- This is understandable, you cannot make interest gains on capital expended for an acquisition
- Higher promotional cost - However this is at discretion of the company. As the company solidifies its brand across geographies, the cost will normalize. Maybe the JD overdid with the advertising campaign this year.
The punishment JD took was too harsh. Next is now forecasting PBT slightly lower than JD but with a market cap 73% higher! Add in that JD has more room for growth than Next (in my opinion). That's how undervalued JD is.
This is an interesting read:
This year’s award for the first shopkeeper to cite the weather in its Christmas profits warning goes to JD Sports. Specifically, the group didn’t care for how mild it has been – not good for shifting fleeces – although the same temperatures didn’t seem to bother Next, which turned in its usual upgrades to forecasts.
So the story probably lies in the other factors mentioned by JD. The group blamed “more cautious consumer spending” and “an elevated level of promotional activity during the peak trading period”. Possible translation: more and more punters think the entire ‘athleisure’ industry – from big brands such as Nike and Adidas, to the likes of JD itself – had elevated prices to silly levels.
Who could blame them? When the retail price of the latest “essential” variation on an old line of Nike trainers is £175, more than a few would-be buyers may conclude that a purchase is actually inessential, or decide to wait until the product goes on sale.
...
Yet the 23% slump in the share price still looks rational. There is a new uncertainty here. Has the industry’s phenomenal ability to crank the fashion handle and maintain pricing power reached a natural ceiling for now? JD didn’t venture a forecast for the 2024-25 year. Very wise: the mood among athleisure consumers seems to have turned very suddenly.
https://www.theguardian.com/business/nils-pratley-on-finance/2024/jan/04/too-mild-for-fleeces-theres-more-than-that-to-jd-sports-profit-warning?ref=biztoc.com
Trends are fashion is cyclical, athleisure may have peaked and now people may be shifting towards more classy ("Next" kind of clothing) until we hit the next fashion cycle?
JD may have grown too fast, too soon, and set the bar too high. 2-3 years of stabilization may be necessary before we can see significant increase in earnings. That is my take anyway. A couple of days ago I didn't think I would be saying this today.
PE currently in the range 6-7. Adjusted profit before tax of about £1 billion, Market Cap of about £6 billions: 6/1=6
Now imagine what revenue would have been if JD did not open the 200 additional stores.
In the meantime Next shares are at an all time high. How the factors that affected JD did not affect Next?
Selling a company making almost £1 bilions PBT at £7 billion market cap. The stock market is the only place where when sales are on people flee the stores.
I added at 130.. way too early, who has a crystal ball though?
At a PE of 15, £80 million reduction in profits can result in a reduction of the market cap of about £1.5 billions actually
200 new stores and revenue increase of 1.8%. Will see what the market thinks about this, maybe an opportunity to add for those confident in the future prospects of the company.
JD is quite an unloved share. Look at Lululemon, market cap of 70 billions with PBT similar to JD sports. The UK stock exchange is growing deserted, with investors turning to highly priced markets.
Back to comparing Lululemon to JD, is it a weakness not to own brands, is it the fundamental reason for JD to trade at a considerable discount, not just lately, but since IPO.
How can Safestore make more profit than revenue?
I hope for more downside to top up. I believe 300p is totally achievable (and surprised we still are this far off).
Softer consumer spending affects JD and Nike differently. JD is growing by taking market share from other retailers even so in a softer market and suffers less from brand competition. JD sells brands other than Nike such as New Balance, Dr. Martens, and cheap alternatives like Fila (which is by the way of outstanding quality, it was considered a great brand in Italy when I was a teenager, it was later taken over by an Asian company. I still buy Fila sometimes). Part of JD are JD Gyms, Shoes, Go Outdoor, etc., so it is not all about Nike shoes. Nike also suffered from the strong US Dollar, which instead plays in favor of JD.
I expect good results from JD, I am positive revenue will be higher than last year (and that is discounting inflation).
I hope we have a trading update next week.