(qlmbusinessnews.com via telegraph.co.uk – – Tue, 12 Sept 2017) London, Uk – –
JD is limbering up to report a jump in sales this week, as it bids to allay fears that demand for trendy trainers and yoga outfits is waning.
The sportswear retailer’s shares have been on a rollercoaster ride driven by concern its growth may come to an abrupt halt, as suffered by US rival Foot Locker last month.
Fears over JD Sports have also been stoked by Nike’s deal to directly sell products on Amazon, and signs that old rival Sports Direct is beginning to turn itself around following a calamitous couple of years.
For the past two years JD Sports’s growth has been propelled by the trend for so-called “athleisure” clothing – a term given to the most fashionable and expensive sportswear – which has prompted shoppers to switch their jeans for lycra.
However, analysts Quo Vadis Capital have warned that “athleisure is over” following Foot Locker’s first drop in like-for-like sales since 2008. “We predict several years of pain for the companies that compete in this arena,” they added. Foot Locker executives blamed a lack of innovation by sportswear brands in the last quarter for sluggish sales.
However, Barclays said that the risk to JD Sports was “exaggerated” and that the British company’s international expansion and strong supplier relationships would continue to deliver growth.
Despite the concerns about the health of the wider athleisurewear market, analysts still expect JD Sports’s half-year sales to top £1bn, an increase of 30pc.
The City is generally expecting pre-tax profits to have risen by more than 21pc to £94m. “A marked decline in the share price over the last quarter is unwarranted, in our view, with a perceived increase in possible competitive pressures from the likes of Amazon, as well as the likes of Asos and Sports Direct,” said George Mensah, analyst at Shore Capital.
“We see the company as one of the strongest plays within the retail sector, and see recent share price weakness as an opportunity for investors to buy stock.”
By Ashley Armstrong