The firm revealed above-forecast profit guidance for its full-year, as interim sales only slipped by 7% even in the face of the coronavirus pandemic.
Profit before tax for the year to February 1, 2021, is expected to be “at least” GBP265mln, the FTSE 100-listed group said, compared to GBP375mln recorded in the previous period.
“[Younger shoppers] became more frustrated during the lockdown and couldn’t wait to get out again and socialise with their friends,” executive chairman Peter Cowgill told The Guardian.
“They probably have got a higher level of appetite for socialising and on balance a [lower] risk threshold.”
The sneakers retailer was encouraged by its performance throughout the summer though footfall at its stores remains weak and the recent strengthening of coronavirus measures in many countries has brought further temporary closures.
In the six months to August 1, 2020, JD Sports’ revenue slipped by 7% to GBP2.5bn, while profit before tax was down 68% to GBP41mln due to the additional costs associated with a shift in revenues to online channels, particularly during the period of temporary store closures.
Net cash at the period end was GBP764.9mln including GBP200mln of temporary factors, such as agreed extensions to supplier terms and rent deferrals.
Keep an eye on online
“The group was not quite ready for the accelerated pace of change to online, and equally will now need to consider how much of this change in shopping habits is permanent,” noted Richard Hunter at interactive investor.
“In turn, this could have implications for the company’s store estate in general, which will need careful scrutiny in ensuring that the mix of physical and online is aligned to the requirements of the consumer.”
“With the company moving quickly to amend its online model where possible, and with the US business providing a significant tailwind in the meantime, the numbers have been well received, and the market consensus of the shares as a strong buy should on balance remain intact.”
Shares added 8% to 780.06p early on Tuesday.
–Adds analyst comment, shares–