Sales and profits are impressive at JD Sports, despite pandemic
JD Sports Fashion continued its long run of impressive financial results reports on Tuesday. And the theme was ‘retention’. It managed to retain most of the sales that would have happened in stores when it was trading online only. And it also retained most of the profits it would have achieved without the pandemic.
The company said the 52 weeks to the end of January saw revenue rising to £6.167 billion from £6.11 billion a year earlier.
Gross profit as a percentage rose to 48% from 47%, which is a feat not many retail businesses achieved during the pandemic year. But pre-tax profit before exceptional items dropped to £421.3 million from £438.8 million and overall pre-tax profit was down to £324 million from £348.5 million.
Nonetheless, it was a powerful set of figures given the unprecedented period of global uncertainty and multiple periods of temporary store closures. The company said this reflected the “strength and premium position of the JD brand and consumers' affinity to it; relevance of product offer to style conscious consumers; agile multichannel ecosystem built up over a number of years; [and] infrastructure flexibility”.
And it was particularly strong in the US where it described its trading performance at the Finish Line and JD chains as “exceptional, in part driven by the enhanced consumer demand consequent to the US Government stimulus”.
International development of JD in other markets also continued to “progress positively”, although the number of new stores slowed temporarily as a consequence of restrictions on construction and fit-out works. That meant an increase of 31 JD stores across Mainland Europe and five JD stores in the Asia Pacific region.
But the business isn’t only about the JD brand and it said that the year also saw its outdoor business returning to profitability in H2, with a strong performance in key categories.
Overall, the company said it benefited from “width in the category offer”. Apparel, principally casualwear and sportswear, performed strongly with sales representing more than 50% of revenues in the UK. And it thinks this growth isn’t just a temporary phenomenon and will continue post-pandemic.
It also said its multichannel approach was key, as was the fact that it’s highly regarded by brands. “JD has a positive relationship and is of increasing relevance to a significant number of international brands who recognise that we share their vision of an elevated marketplace and that we look to nurture collaborative affiliations over the long term,” it said.
During the financial year, in the UK and Ireland, its JD and Size businesses were “resilient”. It was interesting that while the first UK lockdown saw it generating around 70% of the combined store and online revenues of the prior year period, in the November lockdown, that figure went to 100%. Not that stores are unnecessary and it’s still investing in upsizing in key locations.
Meanwhile, its premium brand Fashion businesses seem to be doing well in the UK. Mainline Menswear, which is an online pureplay, had a very strong year “in particular with new customers attracted by its reputation for a high quality digital and customer service experience”. Elsewhere, in those businesses that have both physical and digital offers, it was reassured by the fact that the retention of sales through the various temporary closure periods “was broadly consistent with that seen in JD”.
In Europe, JD and Size saw an average retention of sales through the period of temporary store closures in the spring of 35% with a stronger retention in Northern Europe where online is more mature. Footfall was initially slow to recover as stores reopened, although it progressively improved through the summer and early autumn. Like-for-like store sales were positive in Q3 in many markets although the significant exception to this were the stores in Iberia where a large part of employment, and consequently the wider economy, is linked to tourism.
Executive Chairman Peter Cowgill said: “The global pandemic and, more recently, the UK's formal exit from the European Union have presented a series of unprecedented challenges, which have severely tested all aspects of our business including our multichannel capabilities, the robustness of our operational infrastructure and the resilience of our colleagues.
“Notwithstanding these well publicised challenges, a number of positive themes have been increasingly apparent through the year which gives us confidence that, as we begin to emerge from the worst of the disruption, JD is at the pinnacle of the global sports fashion industry.”
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