Bumper profits for JD Sports as demand for sportswear continues

JD Sports

It’s been another strong year for JD Sports as the country’s largest sportswear retailer reported record pre-tax profits as demand for sportswear continues.

Revenues for the 52 weeks to the 29 January 2022 were £8.5bn, up from last year’s £6.1bn while pre-tax profits surged from £324m to £654m.

It reported strong performances from its sports fashion stores in the UK and Republic of Ireland and North America while outdoor returned to profitability with an elevated demand for holidays in the UK.

A total dividend of 35p has been proposed, up from 29p.

The group said the financial performance demonstrates ‘management’s capabilities in relation to managing both supply chain disruption and frequent consumer channel shift through the COVID-19 pandemic.’

Helen Ashton, Interim Chair, said: “We are, as always, indebted to our talented and committed colleagues across our Group and send our thanks for the amazing work they do every day.

“We are particularly encouraged by the strong performance from the Group’s banners in North America. It is increasingly evident that the Group’s progress in North America, and the United States in particular, is having a long-term positive impact both on the Group’s overall performance and its relationships with the international brands.

“Balancing the operational requirements of running and growing a business through a global pandemic with the obligations of elevating governance standards has been complex and not without challenge.

“A number of regulatory issues have arisen through this time which, following a series of independent investigations alongside the completion of the Group’s Governance review, have highlighted the need for both greater relevant experience on the Board and more formalisation in governance systems, risk management recording, the documentation and appraisal of internal controls and the mechanisms for reporting relevant matters to the regulatory authorities where appropriate.”

Helen also added that the recruitment a new CEO was ongoing after Peter Cowgill, the outspoken chair and chief executive officer of JD, who has led the group since 2004, stepped down last month.

The board is aiming to bring in new blood and split the roles of chair and chief executive, which Cowgill has jointly held since 2014.

She added: “JD is a globally recognised iconic multichannel retailer with a proven strategy, clear momentum and a talented and resilient senior management team who are recognised within the sports fashion industry as some of the leading figures in their fields.

“The Board and senior management team are united in their determination to build on the historical successes with the same laser focus on the consumer, commercial rigour, attention to service excellence and analytical intensity.

“We will continue to seek to inspire the emerging generation of aspirationally minded consumers through a connection to the universal culture of sport, music and fashion with the highest standards of consumer experience and execution, both in stores and online.”

AJ Bell investment director Russ Mould said while JD Sports has reported a record set of results, it must be noted that its financial period ended before the Ukraine crisis unfolded and inflation surged higher and therefore “not representative of the current environment.”

“This headwind is clear to see in the retailer’s forward earnings guidance,” he noted.

“After seeing pre-tax profit more than double in the past financial year, JD now expects no profit growth at all in the current year.

“To make matters worse, the company is still searching for a new leader after splitting with executive chairman and architect of the group’s success, Peter Cowgill. Fortunately, whoever it hires will inherit a strong business with fingers in many pies.

“JD Sports is more than premium trainers. It is now more involved in the biking space, capitalising on interest from those having a mid-life crisis and happy to splash several thousand pounds on the latest carbon frame road bike, as well a general trend for people to be healthier and do more exercise.

“It has also expanded its presence in the gym market where there is a large cross-over with its customer base for clothing, outdoor equipment and bikes.”

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