JD Sports reported full-year revenue of £12.7bn (£12.8bn expected), up 11.7% ignoring exchange rates, with growth largely driven by acquisitions. On an organic basis, sales grew by 2.1% with growth in all regions except the UK.
Underlying pre-tax profits fell by 6.4% to £852mn (£848mn expected), driven by higher operating costs due to acquisitions and store expansions.
Free cash flow rose 36.3% to £462mn. Net debt, including lease liabilities, fell by £0.2bn to £2.8bn.
Organic sales growth was flat over the first quarter. Full-year guidance points to underlying pre-tax profits of between £750-850mn (£832mn expected), with free cash flows of between £460-520mn.
The group announced a 20% increase in the full-year dividend to 1.20p per share. A £200mn share buyback programme is underway and expected to complete by year-end.
The shares rose 3.3% in early trading.
Our view
JD Sports’ full-year results were broadly in line with market expectations. Despite flat organic sales growth in the first quarter and cautious profit guidance for the year ahead, markets were pleased to see cash generation building momentum, and the shares reacted positively.
JD is a sports apparel giant, with more than 4,800 stores across 51 different countries. Acquisitions in the US and France have massively expanded the group’s footprint. Stripping out costs related to new store openings, operating costs were broadly flat over the year. The focus is now on leveraging the cost efficiencies this increased scale can bring.
North America is now JD Sports’ largest region, accounting for 38% of total sales. The picture here is turning more positive, with sales trends improving over 2025 as new product launches and marketing initiatives drove the desired effect. Overall, the US economy remains in relatively good shape.
In the UK, it’s a different story. With a more mature store estate and tougher consumer backdrop, sales have continued to decline. The group’s transitioning to fewer, but bigger and better stores, in the hopes of providing a stronger offering to customers. While we support the strategy, we remain cautious about the outlook for the UK, with changes to employer taxes and minimum wages bringing a handful of extra costs and challenges.
Looking to the year ahead, the group struck a cautious tone and pointed to profits falling by around 5%. That reflects a muted growth outlook for the sports apparel industry, and relatively weaker spending power among its younger core customer base.
The Middle East conflict hasn’t had a direct impact on JD, given its lack of presence in the region. But we’re mindful of the knock-on effects from higher energy prices. Given that JD sells discretionary items, if the economic outlook deteriorates, JD’s sales are likely to suffer more than some other areas of retail.
Looking past the near-term uncertainty, we’re pleased with the group’s change of focus from expansion to improving efficiencies and squeezing the most out of its existing store footprint. We think this is the right approach, and it should strengthen the balance sheet and lead to increased shareholder payouts, although there are no guarantees.
Overall, we still think that the longer-term opportunity looks favourable given JD Sports’ strong market position and impressive cash generation. The current valuation is sitting well below the long-run average and offers upside potential in our view. However, the market is likely to remain subdued in the near term, and fashion retail is a very competitive space. Plenty of patience is required.
Environmental, social and governance (ESG) risk
The retail industry is low/medium in terms of ESG risk but varies by subsector. Online retailers are the most exposed, as are companies based in the Asia-Pacific region. The growing demand for transparency and accountability means human rights and environmental risks within supply chains have become a key risk driver. The quality and safety of products as well as their impact on society and the environment are also important considerations.
According to Sustainalytics, JD Sports’ management of ESG risk is strong.
The group’s environmental policy is strong and executive remuneration is explicitly linked to sustainability performance targets. There is also an adequate whistleblower policy in place. However, ESG reporting and disclosures fall short of best practice.
JD Sports key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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