JD Sports hasn’t ‘done much wrong’ despite profit warning - analysts20 Jan 2025 15:11
JD Sports hasn’t ‘done much wrong’ despite profit warning - analysts
JD Sports Fashion PLC (LSE:JD.)’s profit warning and resultant share price hit on Tuesday has not prompted Peel Hunt and Shore Capital analysts to ditch backing for the retailer.
Both Shore Cap and Peel Hunt reiterated ‘buy’ ratings for JD and pointed to its lack of willingness to cut prices in response to tough market conditions.
JD on Tuesday guided for full-year adjusted pre-tax profit of £915 to £935 million, against £955 million previously, and said organic revenue would grow by roughly 5%.
“JD Sports Fashion has not done much wrong here, in our opinion,” Peel Hunt said, however.
“It has no plans to enter into a race to the bottom by discounting, but that impacts sales and profitability.”
Shore Cap also pointed to “promotional discipline,” leading to a gross margin in line with consensus of 48%.
“We remain positive on the longer-term prospects of the business, with solid margins and cash generation in the UK business, growth opportunities [elsewhere] and all backed by a strong balance sheet,” Shore Cap added.
Recovering demand for Nike products was likely and should see JD positioned to benefit from an upturn ahead of rivals, according to Peel Hunt.
“The long-term strategy is correct and JD should continue to lead the market,” it said.
Shore Cap offered a share price target of 96p, while Peel Hunt trimmed its target from 250p to 200p as challenging conditions appeared likely to continue.
Shares were down 8.4% at 88.26p on Tuesday.
https://www.proactiveinvestors.co.uk/companies/news/1064249/jd-sports-hasn-t-done-much-wrong-despite-profit-warning-analysts-1064249.html
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