Sports group scores with record annual figures

Peter Cowgill

JD Sports Fashion, the Bury-based sports and athleisurewear group, posted record results for the year to February 1, 2020.

Revenues jumped 30% from £4.717bn to £6.11bn, while pre-tax profits increased three per cent from £339.9m in 2019 to £348.5m this year, even after an exceptional items charge of £90.3m which included the impairment of goodwill from the acquisition of Go Outdoors and Choice, and costs from the integration of IT systems and warehousing systems.

There was a net increase of 52 JD stores across mainland Europe during the reporting period, an increase of 18 in the Asia Pacific region and 11 more stores in the US, including the first flagship store in Times Square, New York, which is anticipated to open later in the Summer.

Net cash at the end of the period, being the high point of the working capital cycle, stood at £429.9m, compared with £125.2m the previous year.

The results were not affected by the coronavirus pandemic lockdowns, which began in March this year, however, JD Sports said COVID-19 continues to affect its commercial operations and will have a material impact on its results for the period to January 30, 2021.

Italy was the first country to experience closures on March 11, quickly followed by a number of other markets across Western Europe and the United States.

By March 23 the group had a full closure of its retail portfolio in 14 countries representing more than 98% of its physical store estate.

Online trading remained open in most territories and has delivered a very resilient performance during the closure period and beyond.

Most of the group’s stores are now trading again since the easing of lockdown restrictions.

The group said initial footfall has been weaker in malls and shopping centres, particularly in Northern Europe at weekends, as consumers remain nervous about the risks associated with densely occupied enclosed spaces.

However, it revealed that the reduced footfall is partially offset by stronger conversion with consumers currently less inclined to browse.

JD Sports executive chairman, Peter Cowgill, said: “Whilst COVID-19 has constrained our short term progress, it is important that we do not lose sight of the core retail standards and commercial disciplines which have underpinned our longer term growth to date.

“JD has a market-leading multi-channel proposition which maximises its consumer relevance and reach by creating, and then maintaining, a deep emotional connection with its consumers who see JD as an authoritative and trustworthy source of style and fashion inspiration with influences drawn from both sport and music.

“This proposition remains extremely robust and, in that regard, I am pleased to report that it was another year of significant progress for the group with global revenues increasing by 30% to £6,110.8m (2019: £4,717.8m) and the headline profit before tax and exceptional items increasing by a further 24% to £438.8m (2019: £355.2m). This represented another record result for the group.”

He added: “We were encouraged by the continued positive trading in the early weeks of the year prior to the emergence of COVID-19 and we firmly believe that we are well placed to regain our previous momentum.

“Looking longer term, there is inevitably considerable uncertainty as to what the effect of COVID-19 will be on consumer behaviour and footfall with future store investments highly dependent on rental realism and lease flexibility.

“Ultimately, however, we remain confident that we have a market-leading multi-channel proposition which has the necessary flexibility and agility to prosper within a retail environment that may see profound and permanent structural change.”