How JD Sports Is Capitalizing On The Youth Market To Boost Its Profits

 

JD Sports expects profits to top £1bn for the first time next year as better-off young shoppers snap up its trainers and hoodies.

“Our average customer is young and today they are getting more revenue than in the past,” said Régis Schultz, who took over as chief executive of the FTSE 100 sportswear group in September after his predecessor’s unceremonious departure.

He added that a tight employment market and rising minimum wages in many countries meant their disposable income was increasing despite rising energy and borrowing costs. Many still lived at home with their parents “and don’t have to pay the rent, the mortgage or the utilities”.

Inflationary pressures were stabilizing, he said, noting that freight rates and factory-gate prices were lower and that consumers and businesses were learning to live with higher energy prices.

Profits in the current financial year, which ends on January 28, will be towards the top end of a range of analyst forecasts, currently £985mn with an average of £960mn, according to Bloomberg, after a stronger second half including a bumper Christmas.

“We had our best week ever in all our markets,” said Schultz. JD’s total sales rose more than 20 per cent in the six-week period to New Year’s Eve.

“JD is 80 per cent of our profit and sales . . . but that does not mean we don’t want to do other businesses,” he said. “There is a role for the outdoors and secondary athletic brands.”

One of Schultz’s first moves was to sell a collection of minor apparel brands that he regarded as “a distraction” to rival Frasers Group.