Half-year results lift JD Sports Fashion

The price of shares in FTSE 100 clothing retailer JD Sports Fashion (JD.) climbed by 5.80% to 766.60p (as of 13:45 BST) after the firm posted results for the half year ended 1st August. Revenues for the period were down by 6.4% and pre-tax profits declined by 68% as COVID closed stores and impacted customer demand. There was a sharp boost in performance following stores reopening but management said that this has proved short lived and footfall remains weak in established markets.

Executive Chairman Peter Cowgill commented: “Throughout the COVID-19 pandemic, our priorities have been to ensure the safety of our colleagues and customers, to preserve financial resources and limit the impact on profitability. Continuing outbreaks of the virus and periodic strengthening of public safety measures in a number of our global territories, including forced temporary store closures and the ongoing requirement to maintain strict social distancing in our warehouses, makes us cognisant that further challenges lie ahead.

“Ultimately, given the unique circumstances of this trading period, we are reassured by the strength of the JD brand as demonstrated by the retention of more than 90% of the total revenues. However, it should be recognised that this has necessitated additional costs principally relating to the provision of enhanced health and safety measures, in all areas of the business, together with increased costs of online fulfilment, including performance marketing. Whilst these additional costs have impacted on the result for the period, the Group has retained a significant level of profitability with a profit before tax and exceptional items of £61.9 million (2019: £158.6 million).

“We are generally encouraged by our performance since the stores re-opened and with our performance in the first few weeks of the second half. However, retail footfall remains comparatively weak and the recent strengthening of measures in many countries and the subsequent temporary closure of some stores reminds us that COVID-19 remains an ongoing challenge. Nonetheless, we remain absolutely confident in our strengths in consumer engagement, key brand relationships and globally consistent multichannel retail standards. These, combined with an agile operational infrastructure, provide us with a robust platform for further positive development.

“We also believe that it is appropriate for the Group to reinstate guidance for the full year. Assuming a prudent but realistic set of assumptions for the peak trading period that reflect an uncertain outlook for consumer confidence, the ongoing challenges of attracting footfall to stores and the potential for further operational restrictions; we would presently anticipate delivering a headline profit before tax for the full year of at least £265 million when calculated under IFRS 16 ‘Leases'”.