Here's how JD Sports Fashion can enter the FTSE 100

by from interactive investor |

This high street favourite continues to hit the ball out of the park. Head of markets at interactive investor Richard Hunter runs through these cracking numbers.

Despite high expectations going into these half-year numbers, JD Sports has nonetheless shot the lights out in spectacular fashion.

The company is not completely immune from economic uncertainty in the UK, whilst the fickle nature of its consumers could change over time. In addition, its current pace of expansion does carry integration risk, whilst the cost of that expansion is keeping a lid on the dividend yield, which currently stands at just 0.3%. It has also propelled the company into net debt from net cash, although given the strength of these results that may well be recouped sooner rather than later.

Even so, these numbers speak for themselves. Revenues have jumped 35% and operating profit 20%, underscored by an impressive 24% hike in earnings per share and a gross margin nearing 50%. Like for like sales have added 3% and the complementary offering of online and physical stores is well-suited to the business model.

Meanwhile, the company is looking to piggy-back some of the current economic strength in the US with its purchase of Finish Line, which gives it exposure to a major new market. The expansion does not stop there, however, with moves also being made in Europe and the Asia Pacific, all of which consolidates its strong UK position.

Source: interactive investor      Past performance is not a guide to future performance

With such rapid growth, the market has anticipated this stellar trajectory to a large extent, with the shares having risen 49% over the last year, as compared to a 3.3% gain for the wider FTSE 250, and 34% in the last six months alone.

A performance such as this will keep JD Sports knocking on the door of entry to the FTSE 100, and in the meantime appetite for the stock is undiminished, with the market consensus coming in at an extremely strong buy."

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