By Geoffrey Smith
Investing.com — JD Sports Fashion (LON:JD) shares edged higher at the open in London on Wednesday, outperforming the broader market after the sports gear retailer said it expects to withstand the pressure of inflation and an economic slowdown in the coming year.
JD Sports said it expects underlying profit for the year through next January to stay broadly in line with last year, despite “the headwinds that prevail at this time including the general global macro-economic and geopolitical situation.”
JD’s pretax profit more than doubled to £655 million ($798 million) last year as its stores reopened after a pandemic-plagued fiscal 2021. Over 40% of that came from its U.S. operations, where the Shoe Palace and DLTR both performed strongly. Strong cash flow from operations and a £450 million capital increase in the course of the year left with net cash of over £1.1 billion at the end of January – a strong position from which to negotiate the sharp ongoing rise in interest rates.
The company said gross margins in the U.S. rose by over 300 basis points in the year thanks largely to the government’s generous fiscal stimulus – a factor that won’t be repeated in the current year. Sustained strong demand and low inventory levels allowed it to operate with much less promotional activity than normal.
JD, which has fully repaid the U.K. government aid it received during the pandemic, also increased its dividend to 35 pence a share from 29 pence.
Source:investing.com