JD Sports shares at record amid £750m profit news

Peter Cowgill

Shares of Bury-based FTSE 100 retailer JD Sports Fashion Plc rose 10% on Tuesday to a new high of around £11.58 after it published results for the 26 weeks ended July 31 showing first-half revenue rose 52% to £3.88 billion and profit before tax and exceptionals soared to a record £439.5 million.

Further, JD Sports forecast that it will achieve a headline profit before tax for the full year of at least £750 million.

The company said that in the United States, its aggregate profit before tax and exceptional items increased to £245.0 million which included a total contribution of £72.9 million from the recently acquired Shoe Palace and DTLR businesses.

It said all of its businesses successfully capitalised on the favourable trading conditions provided by a second round of fiscal stimulus from the US Federal Government.

JD Sports said its business in the core UK and Republic of Ireland market saw profit before tax and exceptional items increase to £170.8 million with a strong retention of sales through digital channels in the first quarter whilst the stores were temporarily closed, combined with strong pent-up demand after reopening.

However, JD Sports, which now has a stock market value of almost £12 billion, said it decided “it is not appropriate” to pay an interim dividend.

“The board is cognisant that the group has delivered an excellent result for the first half and that the group’s international operations, particularly those in the United States, have made a very significant contribution to this profitability and so, ordinarily, the board would be recommending the payment of an interim dividend,” said the Bury company.

“However, the board also recognises the potential for further restrictions on trading through the usual peak trading period prior to Christmas.

After careful consideration, the board has decided that it is not appropriate to pay an interim dividend.

“However, the board will consider paying a larger final dividend although a final decision on this will be subject to the performance of the group over the full year to 29 January 2022, taking into account the consequences of any potential further restrictions on trading.”

JD Sports Fashion executive chairman said: The group continues to demonstrate outstanding resilience in the face of numerous challenges arising from the continued prevalence of the COVID-19 pandemic in many countries, widespread strain on international logistics and other supply chain challenges, materially lower levels of footfall into stores in many countries after reopening and the ongoing administrative and cost consequences resulting from the loss of tariff free, frictionless trade with the European Union.

“Given these challenges, the record result that the group has delivered in the first half with a profit before tax and exceptional items of £439.5 million (2020: £61.9 million; 2019: £158.6 million) is extremely encouraging.

It is most reassuring that the core JD business in the UK and Republic of Ireland performed strongly in the first half delivering a profit before tax and exceptional items of £170.8 million (2020: £52.0 million; 2019: £114.9 million).

“This result also includes a particularly strong performance from the group’s banners in the United States which have delivered a combined profit before tax and exceptional items of £245.0 million (2020: £73.4 million; 2019: £35.7 million).

Ultimately, the group is at the pinnacle of the global sports fashion industry with consumers instinctively knowing that our retail propositions focus on their fashion desires and aspirations in both footwear and apparel, with an agile multichannel ecosystem delivering the highest standards of retail execution and consumer experience.

“This is respected by the international brands who regularly call JD out as a premier global strategic partner.

“We remain absolutely confident that our inherent strengths in retail dynamics and operations provide us with a robust platform to make further progress.

“At this time, we are generally encouraged by our performance in the first few weeks of the second half although retail footfall remains comparatively weak in many countries.

“Assuming a prudent but realistic set of assumptions for the peak trading period ahead which take into account the absence of stimulus in the United States for the second half of the year, in addition to current industry-wide supply chain challenges, we presently anticipate delivering a headline profit before tax for the full year of at least £750 million.”