Shoppers will shake off high street fears says JD Sports
Queue of shoppers wait to enter JD Sports store in Cardiff on the first day of re-opening after the winter lockdown
JD Sports expects shoppers to have shrugged off any apprehensions on returning to stores by June as it predicted profits will rebound strongly on easing restrictions.
The FTSE 100 retailer said pre-tax profits would be between £475m to £500m for the 12 months to January 2022, up from the £421m recorded for the latest financial year.
Such a result would be ahead of pre-pandemic levels. JD Sports posted a pre-tax profit of £438m for the year to January 2020.
Shares in JD Sports hit a record high on the results, up almost 5pc to 957p in afternoon trading that values the company at close to £10bn.
Executive chairman Peter Cowgill said: “Unless something material arises in the meantime, I think [concerns] have largely subsided. I don’t think it’s front of mind anymore, and post-June, really people will be looking for a reason. Things [on the high street] will return to the norm”.
The company’s results come a day after restrictions eased in England and Wales, allowing JD Sports to reopen stores with queues forming outside some outlets in the early hours.
Whilst across the retail sector, Springboard found that overall footfall was down by around a quarter from pre-pandemic levels in the afternoon, JD was among the best performing stores.
The retailer said there was “cause for optimism in the future of our store estate”, citing demand in the August to October period when restrictions were eased and like-for-like sales stores jumped more than 4pc.
However, Mr Cowgill said retail space was still “too expensive” in Britain. “I think property in the UK will be repriced. And if the rent is lower, it will encourage retailers back.”
JD Sports said it would be resuming its annual dividend, paying out 1.44p a share.
The company ended the year with almost £800m in cash – almost double the amount it had last year – but said it would not be handing back any government relief it received during the year.
Mr Cowgill took aim at some rival retailers that had not been forced to close during lockdown. “We had to close. Not all retailers that have benefited from being open have paid back their rates, and there are retailers who have been selling clothes and footwear during this period when we’ve been closed,” he said.
While the company enjoyed a surge in sales in the US and signalled high hopes for the year ahead, the outlook for some parts of the business was less bright.
JD was still unable to integrate the Footasylum business and in its results said there was “inevitably considerable uncertainty as to whether levels of footfall into the Footasylum stores, which attract an older demographic than JD, will recover to historic levels”.
The £90m deal was first announced in March 2019 and was initially blocked by the Competition and Markets Authority, although that decision was overturned late last year. The regulator is still reassessing the deal.
Mr Cowgill said much had changed since the takeover was agreed. “It’s a totally different market. The pandemic has allowed businesses to accelerate their direct to consumer. That’s been a major change. To accommodate that, brands are likely to reduce supply to smaller retailers, of which Footasylum is clearly one. Would we have bought it? Not at the price.”