JD Sports Shares Jump as Quarterly Sales Boosted By International Expansion

Sportswear retailer JD Sports Fashion (LON: JD.) has seen its shares rally in early Thursday trading following a strong second-quarter trading update.

At the time of writing, the stock is up more than 5% to around 135.64p.

The company reported a 2.4% increase in like-for-like sales and an impressive 8.3% organic sales growth during the period, citing its “strong, agile multi-brand model.”

The positive results were also boosted by the company's international expansion. In particular, JD Sports saw double-digit organic sales growth in North America and Europe, fueled by the continued rollout of its JD stores.

The company's CEO, Régis Schultz, expressed satisfaction with the performance: “I am pleased to report like-for-like sales growth of 2.4% and organic sales growth of 8.3% in the second quarter, demonstrating the strength and agility of our multi-brand model.”

The acquisition of Hibbett, Inc., completed just before the end of the period, is expected to further bolster JD Sports' presence in the US market. With Hibbett's strong community presence and extensive network of stores, JD Sports aims to accelerate its growth and brand relationships in the world's largest sportswear market.

Despite a volatile market environment, JD Sports managed to maintain its gross margins through disciplined promotional practices and proactive inventory management. The company's first-half gross margin came in at 48.3%, slightly below the previous year.

Looking ahead, JD Sports remains cautious about the global macro environment. However, based on its strong first-half performance, the company maintains its full-year profit guidance range of profit before tax and adjusting items of £955 million to £1.035 billion on a pre-Hibbett basis.

Last week, analysts at Deutsche Bank downgraded JD Sports shares to Sell from Hold with a new price target of 110p, down from 115p. The bank told investors in a note that JD Sports shares are trading at an “unwarranted” free cash flow yield premium compared to peers amid “subdued” category spend.