JD Sports shares surge to all-time high on profit upgrade

·Contributor
·3-min read
JD Sports shares surge to all-time high on profit upgrade
Revenues rose 52% to £3.89bn during the first half of 2021, as JD Sports benefited from 'robust consumer demand' in the UK and Ireland. Photo: May James/SOPA Images/LightRocket via Getty

JD Sports (JD.L) surged as much as 9% on Tuesday, to a fresh all-time high, after reporting record earnings for the first half of the year.

Pre-tax profit for the six months to 31 July came in at £364.6m ($505.88m), compared with £41.5m for the same period a year ago. This was also higher than its pre-pandemic profit, which stood at £158.6m in the same period in 2019.

The FTSE 100 sports retailer now expects to deliver profits of £750m for the full financial year, ahead of the £600m figure predicted by analysts.

Revenues also rose 52% to £3.89bn during the period, as it benefited from "robust consumer demand" in the UK and Ireland.

The strong rebound in sales came amid pent-up demand from customers returning to stores and continued online spending. This was despite still being affected by widely-reported supply chain disruptions, Brexit-related costs and pandemic restrictions.

Read more: Ocado hit by driver shortage and fire disruption costs

The group said it saw a “strong retention” of UK sales during the lockdown at the start of the quarter.

JD Sports made a number of acquisitions over the last year which helped boost its presence in America, including the $495m (£356m) purchase of Baltimore-based shoe chain DTLR Villa.

JD Sports shares surged on Tuesday. Chart: Yahoo Finance
JD Sports shares surged on Tuesday. Chart: Yahoo Finance

However, the company said that it was “very disappointed” by the UK competition regulator's report earlier this month, saying it was minded to prohibit the group's acquisition of footwear brand Footasylum.

JD Sports said: “The CMA's findings are, however, provisional and JD remains committed to its transaction goal of improving Footasylum's resources, access to product and differentiated customer proposition.

“JD will continue to make its case strongly to the CMA before it releases its final report, due in October 2021.”

While it withheld an interim dividend on Tuesday, it pointed to a potentially larger full-year dividend, subject to the performance of the firm over the period “taking into account the consequences of any potential further restrictions on trading.”

“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,” Peter Cowgill, executive chairman, said.

Read more: UK job vacancies surge to over 1 million for first time ever

“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 £750m.”

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Demand for trainers and the trend for althleisure wear shows little sign of going out of fashion. Casual styles are en vogue not just for free time but increasingly while at work too, with so many people still using their home as their office.

“The sports leisure market in the US is huge and here JD Sports is stepping up the pace of sales, which will be key to future growth prospects. It’s already the group’s most profitable territory, thanks to multiple acquisitions and rebranding of stores.”

Watch: JD Sports 'perplexed' as Footasylum takeover again faces being blocked by regulators

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting