Deutsche Bank expects JD Sports Fashion's (LSE:JD.) second-quarter like-for-like sales to improve, even as the broader sporting goods sector stays difficult to navigate.
Analyst Adam Cochrane said retailers and brands across the industry flagged excess inventory and a shift toward performance products away from lifestyle lines in the first half, with only a short-term lift from World Cup football jersey sales.
Deutsche Bank repeated a Hold rating on the sports and fashion retailer, with a 95p price target against a last close of 93.4p.
Cochrane said JD has likely been forced to participate in a more promotional environment, particularly in Europe, to stay competitive, which could weigh on gross margin.
On the outlook, the broker expects management to maintain its view of muted market growth, with a risk that JD turns more cautious on the second half given excess inventory and tighter wholesale allocation from some brands.
Deutsche Bank thinks JD's wide profit before tax and adjusting items guidance range of £750m to £850m is likely to stay unchanged given the uncertainty, sitting close to consensus of £781m and the broker's own £770m estimate.
The UK-headquartered multi-brand sports and fashion retailer, whose North American business now accounts for roughly 38% of group sales, next updates the market with its second-quarter trading statement on 20 August.
