(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 pounds ($465 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.
Cowgill said JD had also benefited from a trend toward 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 pounds.
“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 behavior or spending, Cowgill said “none whatsoever, in fact it has become more positive.”
Reporting by Muvija M in Bengaluru; Editing by Bernard Orr and Susan Fenton