JD Sports bounces back, achieves record first-half profits
JD Sports Fashion reported an earnings surge on Tuesday as the first half of its financial year saw strong demand on the back of lockdowns being eased and ended.
It said pre-tax profit soared to £364.6 million for the six months to July 31 from just £41.5 million a year earlier. Revenue rose to £3.88 billion from £2.54 billion and gross profit as a percentage was up to 48.5% from 45.6%. Profit before tax and exceptional items hit record levels at £439.5 million, up from £61.9 million a year ago and £158.6 million in 2019.
That included “significant contributions” from the US, where aggregate profit before tax and exceptional items increased to £245 million from £73.4 million year-on-year (YoY) and £35.7 million 2-year-on-year. It saw a £72.9 million contribution from the recently acquired Shoe Palace and DTLR businesses.
“All of the group's businesses have successfully capitalised on the favourable trading conditions provided by a second round of fiscal stimulus from the Federal Government”, it said.
Its JD business in the core UK and Republic of Ireland markets was also strong as profits increased to £170.8 million from £52 million YoY and £114.9 million 2YoY. It saw “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”.
But it wasn’t only about those two major markets. During the period, acquiring control of Marketing Investment Group in Poland gave the group a presence in Eastern Europe for the first time and while the pace of new stores has been impacted by the ongoing restrictions on construction and fit out works in certain markets, it has continued to expand. In the half, it opened 21 new JD stores opened across Western Europe, six new JD stores in the Asia Pacific region with four new stores in Australia and two stores in Thailand. It also has 66 stores now trading as JD in the US.
The company also said its Outdoor business returned to profitability delivering a profit before tax and exceptional items of £10.8 million after a loss of £16.8 million last year.
Executive chairman Peter Cowgill 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 is extremely encouraging.
“We remain absolutely confident that our inherent strengths in retail dynamics and operations provide us with a robust platform to make further progress.”
Importantly too, he said he’s “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”.
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