Citi cuts JD Sports to 'neutral'
By Michele Maatouk
Date: Thursday 23 Jan 2025
(Sharecast News) - Citi downgraded its stance on JD Sports on Thursday to 'neutral' from 'buy' and cut its price target to 95p from 150p as it pointed to a weaker growth outlook.
The bank said it was updating estimates following soft peak trading and the company's full-year guidance downgrade.
Citi cut its forecast for FY25 like-for-like and organic growth to 0.0% and 5%, respectively, from 1.1% and 6.4% growth, previously.
The forecasts for FY26 were cut to -2.7% and +1.3%, from +1.6% and +6.9%, respectively. Citi said this reflects weak consumer sentiment and a promotional environment that JD has chosen to limit participation in, particularly in North America and the UK.
The bank's estimate for FY25 gross margin therefore increased 10 basis points to 47.8%.
"Our reduced sales forecasts lead to FY25e EBIT margin -30 basis points versus previous estimates," it said.
"We reflect the Courir acquisition, and JD's new guidance of an additional acquisition accounting-related cost for Hibbett of £6m in FY25e."
Citi cut its FY25 pre-tax profit estimate by 5% to £920m, versus consensus of £955m and guidance of £915m to £935m, while the FY26 estimate for pre-tax profit was cut 18% to £930m.
At 1510 GMT, the shares were down 2.4% at 81p.
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