Top-level insiders such as CEOs and Chairmen tend to have an excellent understanding of their companies’ operating activities. If they’re buying company stock, it’s often a signal that the business is performing well and that the outlook for the stock is attractive.
In this report, we are going to highlight a large Chairman purchase at JD Sports Fashion PLC (JD/:LN). JD Sports Fashion is a UK retailer that specializes in athletic footwear and athleisure wear. The company operates in over 20 countries worldwide, selling its products both in stores and online. It is listed on the London Stock Exchange and currently has a market capitalization of approximately £8.17 billion.
Insider Buying at JD Sports Fashion
2iQ data shows that on January 11, JD’s Chairman Andrew Higginson purchased 159,704 shares at a price of £1.51 per share. This trade cost the insider approximately £241,000 and increased his holding to 458,646 shares.
Mr. Higginson has considerable experience in the retail sector. Most recently, he was Chair of William Morrison Supermarkets from January 2015 until the takeover of the business by private equity firm CD&R LLP in November 2021. Earlier in his career, he spent nearly 15 years in senior leadership roles at Tesco. Given his experience, he is likely to have a good understanding of the current retail environment.
What stands out about his recent purchase is that it has increased the size of his holding by 53%. The fact that the Chairman has upped his stake by such a large percentage suggests that he’s very confident the stock is set to move higher.
Strong Trading Over Christmas
JD Sports Fashion recently posted a strong trading update.
In the update, the group said that revenues in its organic retail businesses had strengthened in the second half of its fiscal year, with total revenue growth of 10% for the 22 weeks to December 31, 2022, versus 5% in the first half of the year. It noted that trading during the Christmas period was particularly strong, with total revenue growth of more than 20% for the six-week period to the end of 2022.
As a result of the strong recent trading, the company advised that it now expects headline group profit before tax and exceptional items for the fiscal year ending 28 January 2023 to be towards the top end of market expectations.
"The engagement and commitment of our teams through the peak trading period has been phenomenal with many of our stores and websites delivering record sales and JD's market-leading product and retail experience capturing the imagination of customers globally like never before," commented CEO Régis Schultz.
In light of this update, and the fact that the stock is well off its highs, we see the insider buying here as a bullish indicator.