Jd Sports Fashion Share Discussion Threads

[hatfullofsky] 05/12/2024 20:35

Hit by Frasers news, but showing some support

[investtofly] 04/12/2024 15:50

Foot Locker fell 20% due to trading update but picking up a bit now

[hatfullofsky] 04/12/2024 11:51

WTF just happened !!! Dropped 2% in 5 min

[alotto] 29/11/2024 11:40

I was in Dubai last week. JD was in the city mall and it was well attended by customers.
It later found out it was a new opening

[leedsu36] 29/11/2024 11:18

I travel through a lot of airports ymaheru, every single JD shop i see in one, is only second in customers to the Duty free shop.

They do a roaring trade in them, and i hope to see more and more.

[ymaheru] 29/11/2024 00:28

This is the stuff that concerns me (short term):
“The number of shoppers out and about in the UK fell for the second month in a row in November. Total footfall at retail destinations fell 4.5% in the four weeks to 23 November”

So, wouldn’t expect JD’s Nov to be any better than their Oct.

[1knocker] 28/11/2024 13:24

So what target value does all that analysis put on the shares?

I have been in and out of these a couple of times, and I am currently back in. I need 115 for a 20% profit (a bit more to make that 20% net profit. My present thoughts are to take that if the opportunity presents itself.

History tells me these are shares to trade rather than hold, especially as the dividend is derisory.

If I had just bought and held my original holding I would be in the red. As it is I have exited once for a decent profit, once for a small profit, and am currently in the blue on my current holding which was bought at the lowest of my three entry prices. I don't see these going to the moon but if they remain volatile there is decent money to be made trading them.

[disc0dave46] 28/11/2024 11:50

Thanks ym.Thought you were referring to eps:-"so 11.7% EPS growth estimate for H2."Hence my querying your adjusted eps for this FY of only 10.6p.

[ymaheru] 28/11/2024 11:38

Disco, with EPS, mainly I was talking about profit after tax.

I know adjusted will be higher this year.
Your figures seem reasonable for both years. FY26 should get about 4% EOS boost just from Hibbett. Another 10% on top would be very welcome.

[disc0dave46] 28/11/2024 10:53

ymAre you saying this FY H2 adjusted eps will be 12% higher than H1?, so only 10.6p eps for the year?.Last year they generated adjusted eps of 12.1p on pbt of £917m. This FY the very worst forecast (bottom of pbt range £955m less fx headwind £15m) of £940m, 2.5% up on last FY. I've pencilled in 12.5p to 13p adjusted eps for this FY and forecast eps growth of 14% for FY26.

[ymaheru] 27/11/2024 19:43

Here are my numbers:
Organic sales growth was 5.4% in Q3 and margins expanded 0.3.
Hibbett will contribute about 8% in H2 (if H1 report still stands).

So, I’d expect Q3 was over 14% EPS growth.
Q4 sounds more muted, so let’s say only 10%. Q4 has higher sales, so higher weighting (4/7 of the period), so 11.7% EPS growth estimate for H2.

Overall FY EPS will be down because of H1 EPS, but I’d be looking for H2 EPS growth of about 12% and guidance for next year adjusted pretax about £1050 million.

[ymaheru] 27/11/2024 19:16

Personally, I value Chris's viewpoint and posts, but don’t agree with the analysis. I’d still rather read those comments.

[disc0dave46] 27/11/2024 18:11

ChrisSome valid points but look at last years numbers in terms of statutory and adjusted.You don't like the business so why did you buy at 96p?, sorry don't buy it was a sarcastic posting.

[alotto] 27/11/2024 16:57

Lots of red in the indexes in these days due to trump planned tariffs.

[kemche] 27/11/2024 16:34

The elephant in the room is Trump. How will tariffs impact JD? We know that a majority of their stock emanates from China, Vietnam, Indonesia, Korea, Bangladesh......

[ymaheru] 27/11/2024 16:13

Chris, sounds like you’re saying acquisitions are always bad. I don’t mind the company investing my money, especially when it helps plug gaps in their portfolio.
They are not constantly negative in cash flow.

Also, I quite like a write down on net income. Costs nothing and saves tax. Hells cashflow overall, and that’s what businesses should be doing.

I’m no huge fan of JD, but the things you criticise seem like good business.

The lack of growth is the only issue for me.

[chriss911911] 27/11/2024 14:13

ymaheru, if you have less cash than you started you burnt cash, or if you prefer cash outflow, this is what JD reported, its not an opinion, it is a factual statement. Profit is one thing, quality of earnings is as important, you spend loads on inventory and capex, you have had an outflow of cash, it says it on the statement, and you keep doing it, then it's a concern on reliability.

The French CEO deciding to spend the last of the petty cash on a French shopping chain Courir paid in cash 0.5bn, which JD describe as being funded, through a combination of existing cash and a drawdown on our revolving credit facility, how does that help risk management, and like for like store performance ?

Once the money runs out, what then ? no wonder it dropped 50% in just a few weeks, also fact, as the market digests the choices, and ugly cash/risk evolution. Buying something on a higher multiple to what your trading on, when almost all in this space, have seen some pressure on like for like basis, is just plain nuts, the brand alignment is messy, and disconnected, so don't get it on any level.

The fact is it reported earnings of 0.3p, and we are supposed to believe it is 12p after all the adjustments, have adjustments okay, but 0.3p to 12p, come on, that's not reasonable, I could accept some adjustments, not 90%+ of earnings are all adjustments, so not accepted as statutory earnings.

They have not shown the cash development, 2bn of stock will just rise again no doubt, and they will be in debt come the new year, with a vastly different fixed cost base to look after, after two purchases which kill the risks/reward balance...

[alotto] 27/11/2024 07:28

“It (Courir) has 323 stores currently, bannered as Courir across France, Spain, Belgium, the Netherlands, Portugal and Luxembourg. In addition, there are a further 36 stores which trade under franchise agreements as Courir in North West Africa”

Does ‘currently bannered’ mean that they may be rebranded?
A common JD logo/brand would help with global advertising, especially in global sport events.

[ymaheru] 26/11/2024 22:00

Yes, alotto is right. Cashflow is ‘poor’ because they paid an ok price for a good acquisition (filling in geographical gaps in JD’s portfolio).

Further, their interest-bearing loans are less than their cash. They do not have net debt (not accounting for leases).

Also, the EPS appears to mainly be affected by a write down to Hibbett’s ‘right of use assets’ (4.6p of the 4.7p adjustment). Seems a sensible way to reduce Corp tax. Doesn’t reduce cashflow.

So, it’s not cash burn and they aren’t in any significant debt and seem to be making decent cash.

[alotto] 26/11/2024 21:20

Chriss I looked at the numbers. JD paid £800+ millions for the Hibbett acquisition, a non-recurrent expense. That's why the adjusted figures are so different from statutory.
You're also looking at the 26 weeks ending in August. Less than half of the operating cash comes from H1.
JD is light on debt, interest paid is just £10 millions.
Look at the income tax paid. £132 millions for the 26 weeks.
A clear indication of financial shenanigans is low tax with disproportionate profits. Which is not the case for JD.
JD is extremely cheap on fundamentals.

[disc0dave46] 26/11/2024 18:14

Post 2829"Gosh Christmas has come early, thank you very much who ever sold to me at 96p, much appreciate the gift"

[chriss911911] 26/11/2024 16:48

Was trying to be sarcastic on the gift of shares at 96p, so no neither seller or buyer, no position in JD, had a look and a deeper dive put me off. The numbers I used were from page 18, Unaudited Condensed Consolidated Statement of Cash Flows. Operationally they generated just 80m in cash before paying lease payments, interest or dividends.

The end result they burnt £0.2bn, similar the last interim period form prior year.

They fully funded the acquisition from debt at £0.8bn GBP, so over 1bn USD so no impact on cashflow for that. The price they paid, paying a premium for a fashion retail stock, the US valuations are not exactly value territory to start with and in case of Hibbett had tripled in value since summer of 2023, just before fashion garment stocks in general, started to lurch down dramatically during the summer after the deal was done.

Some headlines read record profits, but they should also read record cash burn to balance the opinion, at that point, it leaves a lot of doubt what is left exactly with weak growth and rising costs only to make it worse, I don't see a positive update come the new year and expect to see more cash burn at accelerated rate.

[alotto] 26/11/2024 15:11

Chriss where did you get the numbers you report in your analysis?

[disc0dave46] 26/11/2024 14:22

I'm assuming your 96p purchases that you were very grateful for 5 days ago have been sold?.Personally no issues with their adjustments plus you can take at least £400m off their debt as it's non interest bearing ie leases.

[chriss911911] 26/11/2024 13:01

Had a look and looks expensive, for anyone interested why....I see reported earnings just 0.4p per share, yet, reporting adjusted earnings of £0.48bn, or 10p a share, so adj are 20x more than actual achieved earnings, I see a lot of costs to keep the stores going and inventory rising, I get the new stores, and acquisition, but still, not sustainable.

The dividend is barely covered by earnings at 0.3p, versus earnings of 0.4p. Cash and cash equivalents in the period was an outflow of £222.0m which is probably nearer the mark where profit (aka loss) is, and net debt including leases rose again, now nearly 3bn, that's an awful lot of running shoes to sell before even paying staff let alone shareholders....

JD Sports employs over 51000 staff, the budget will add around 75m of costs to keep those staff legally, or just under half what they spend on rent, strategy seems to be open loads more stores, whilst everyone else is closing, 20% of UK retail stores closed in most recent year, and whist new ones did open, still down 7% year on year.

To be aggressively adding stores, probably masks the problems you leave behind, as you have always lots of things that starting and being discontinued, so lots of adjustments, some okay, but 20x the underlying earnings as adjustments, is laughable, and they want 5bn for it, hmmm, that's an awful lot of pain for holders waiting to unwind. A price at a discount to NAV could be a more likely future post Xmas, sub 50p.

So to summarise, the cashflow is rubbish, and the earnings quality about the worst there is out there, so not an interesting investment, despite the weaker share price, the valuation is not weak, given the cash realities here and outlook. It could retest lows and head to discount to NAV at this rate, unless it can be confident to achieve double digit top line growth, to support the spend and cost increases, otherwise it will just be burning cash again. There is no sign of any confidence to get close to that from their update.