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Best Performer in U.K.’s FTSE 100 Faces Brexit Test

Lisa Pham

(Bloomberg) -- U.K. sneaker seller JD Sports Fashion Plc, the biggest gainer in the FTSE 100 Index this year, is set to prove whether its stellar growth can continue even as Brexit uncertainty lingers in its home market.

The retailer reports first-half earnings on Tuesday and Shore Capital analysts predict 41% growth in revenue to 2.6 billion pounds ($3.2 billion), a performance that will include a full contribution from last year’s acquisition of Finish Line Inc. The purchase of the U.S. sneaker seller demonstrated the scale of JD’s ambitions to seek growth outside of its domestic market.

“JD deserves a premium rating given the international growth prospects of the company,” Shore analysts including Greg Lawless wrote in a note previewing the earnings. They have a buy recommendation on the stock, as do all but two of 12 other analysts whose ratings are monitored by Bloomberg.

Shares of JD Sports have jumped 84% in 2019, making it the best performer in the FTSE 100, which it joined in June. By contrast, U.S. peer Foot Locker Inc. has fallen 26% after reporting two quarters in a row of comparable sales that missed analysts’ expectations.

Of particular note will be whether the retailer provides a pretax profit forecast for the fiscal year and how that would compare with broker estimates of about 406 million pounds, according to data compiled by Bloomberg. JD said in July that it expected to deliver earnings “at least equal” to consensus projections, though Berenberg sees the potential for an upgrade to guidance if first-half growth is stronger than expected.

“From a U.K. consumer perspective, in some of the toughest conditions in U.K. retail over the last 12 months, JD has continued to buck the trend,” Berenberg analyst Graham Renwick wrote in a note last month.

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