Broker snap: finnCap raises forecasts for JD Sports after Spanish purchase

27th Jun 2011 12:46

To reflect JD Sports Fashion's Spanish acquisition announced earlier this week, finnCap has upped its forecasts for the sportswear retailer and reiterated its buy rating."On Monday we covered JD's move into Spain via a 50.1% investment in Sprinter, a 47-store chain. That Spanish-incorporated subsidiary will, in turn, own 70% of JD Sprinter, a company created to develop JD stores in Spain: the remaining 30% will be subscribed directly by JD, giving it an effective 65% stake," explains analyst David Stoddart.At the same time, the group acquired the businesses and assets of eight of the fashion chain Cecil Gee's stores from their owner Moss Group for £1.7m. They are expected to be folded into the Scott's estate. "Gee's [like-for-like] of late have been weak, so it could remain loss-making this year.""We have re-modelled JD to add in the Spanish businesses and the resulting minorities. We have added the Gee stores into the Scott's estate in such a way as to slightly reduce its contribution this year," Stoddart said.As such, pre-tax profit forecasts for the current year (ending 29 January 2012) have been raised by 2.3%, while earnings per share estimates are pushed 1.4% higher.The target price is hiked from 1,175p to 1,190p.BC