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MarketScreener Homepage  >  Equities  >  Xetra  >  Adidas AG    ADS   DE000A1EWWW0

ADIDAS AG

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adidas : Athleisure wear helps JD Sports defy Britain's retail gloom

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04/16/2019 | 06:10am EDT
FILE PHOTO: People pass a JD Sports store in London

(Reuters) - Millennials' fondness for athleisure wear helped retailer JD Sports Fashion defy Britain's retail gloom and beat full-year earnings expectations on Tuesday.

The group's expansion over the past year, with the purchase of U.S.-based Finish Line and smaller rival Footasylum, also bolstered annual profits, sending JD shares to a record high.

Executive Chairman Peter Cowgill said Britain's biggest sportswear retailer had targeted millennials and Generation Z consumers - those born between the mid-1990s and the mid-2000s - who had driven the trend for athleisure, whereby gym clothes have become acceptable at work, school and on social occasions.

"It (athleisure) is becoming far more seamless between sport and leisure, it is a cultural impact," Cowgill told Reuters in a phone interview after the company said headline pretax profit rose 15.5 percent to £355.2 million for its financial year ended Feb. 3.

Britain's retail industry has been hit by weakening consumer spending amid uncertainty over Brexit, higher business costs and a shift to online shopping.

JD, with more than 2,400 stores that sell brands including Nike, Puma and Adidas, has weathered the storm thanks to its international footprint and a strong online presence.

That contrasts with rival Sports Direct, majority owned by billionaire Mike Ashley, who has recently failed in takeover attempts including for Debenhams and Findel.

"JD is not immune to the widely reported challenges to physical retail in the UK with lower footfall on many high streets, malls and retail parks combined with cost challenges," JD Sports said in its results statement.

Still, the owner of Footpatrol and Cloggs did not cut prices over the Christmas period even as other retailers scrambled to attract shoppers through heavy discounts.

CHUNKY SHOES

Cowgill said JD had also benefited from a trend towards more chunky footwear, particularly among women.

Chunky shoes, once considered "dad sneakers", have gained popularity recently after celebrity entrepreneur Kylie Jenner sported them last year in collaboration with Adidas.

JD, which was founded in 1981 with a single store in the northwest of England, reported a 6 percent rise in total like-for-like sales for its financial year through February.

Its shares rose as much as 3.3 percent after the results to a record high of 550 pence. Pretax profit beat a company-supplied analysts' forecast of £349.2 million.

"It's hard to think of such an impressive showing anywhere else in retail and JD's LFL (like-for-like) sales growth and profit delivery is stellar," said Peel Hunt, calling the stock "a clear buy".

Asked if JD had seen any signs of a dip in customer behaviour or spending, Cowgill said "none whatsoever, in fact it has become more positive."

>Graphic - JD Sports overtakes Sports Direct as expansion efforts pay off:

(Reporting by Muvija M in Bengaluru; Editing by Bernard Orr and Susan Fenton)

By Muvija M

Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS AG 0.50% 280 Delayed Quote.52.74%
JD SPORTS FASHION PLC -0.13% 619.4 Delayed Quote.77.81%
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Financials (EUR)
Sales 2019 23 464 M
EBIT 2019 2 723 M
Net income 2019 1 923 M
Finance 2019 1 086 M
Yield 2019 1,40%
P/E ratio 2019 28,4x
P/E ratio 2020 25,3x
EV / Sales2019 2,31x
EV / Sales2020 2,18x
Capitalization 55 185 M
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Number of Analysts 35
Average target price 259  €
Last Close Price 279  €
Spread / Highest target 16,5%
Spread / Average Target -7,22%
Spread / Lowest Target -35,5%
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Kasper Bo Rørsted Chief Executive Officer
Igor Landau Chairman-Supervisory Board
Harm Ohlmeyer Chief Financial Officer
Willi Schwerdtle Deputy Chairman-Supervisory Board
Wolfgang Jäger Member-Supervisory Board
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