Windfall profits for JD Sports as demand for sportswear continues

It was another strong year for JD Sports, the nation’s largest sportswear retailer, posting record pre-tax profits as demand for activewear continues.

Revenue for the 52 weeks to January 29, 2022 was £8.5bn, up from £6.1bn last year, while pre-tax profits fell from £324m to £654 million.

It recorded strong performances from its sportswear stores in the UK, Republic of Ireland and North America, while outdoor returned to profitability with strong holiday demand in the UK.

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

The group said the financial performance demonstrates “management’s ability to manage both supply chain disruptions and frequent shifts in consumption channels during the COVID-19 pandemic.”

Helen Ashton, Acting Chair, said: “We are, as always, indebted to our talented and committed colleagues across our group and thank them for the incredible work they do every day.

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

“Balancing the operational demands of running and growing a business during a global pandemic with the obligations of raising governance standards has been complex and not without its challenges.

“A number of regulatory issues have arisen during this period which, following a series of independent investigations alongside the completion of the group’s governance review, have highlighted the need for the both greater relevant board experience and greater formalization of governance systems, risk management recording, documentation and assessment of internal controls and reporting mechanisms. reporting relevant issues to regulatory authorities, as appropriate.

Helen also added that the search for a new CEO was underway after Peter Cowgill, JD’s outspoken chairman and CEO, who has led the group since 2004, stepped down last month.

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

She added, “JD is a globally recognized iconic multi-channel retailer with a proven strategy, clear momentum and a talented and resilient management team who are recognized in the sports fashion industry as some of the leading figures in their fields.

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

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

AJ Bell Chief Investment Officer Russ Mold said that although JD Sports released a record set of results, it should be noted that its financial period ended before the Ukraine crisis unfolded and the inflation has increased and is therefore “not representative of the current environment”.

“This headwind is clearly visible in the retailer’s earnings forecast,” he noted.

“After seeing pre-tax profit more than double in the past fiscal year, JD no longer expects any further profit growth for the current year.

“To make matters worse, the company is still looking for a new leader after parting ways with executive chairman and architect of the group’s success, Peter Cowgill. Fortunately, whoever he hires will inherit a solid company with fingers in many pies.

“JD Sports is more than just high-end trainers. It’s now more involved in the bike space, capitalizing on the interest of those having a midlife crisis and happy to splash several thousand pounds on the latest bike carbon-framed road bikes, as well as a general trend for people to be healthier and exercise more.

“It has also expanded its presence in the gym market where there is a great crossover with its customer base for apparel, outdoor gear and bicycles.”

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