The boss of JD Sports has said the retailer has no intention of repaying taxpayer support despite resuming dividend payments to shareholders and saying that profits this year will be higher than before the pandemic.
Lockdown restrictions meant JD Sports stores were shut for more than half of 2020 but the retailer still managed to marginally increase sales from £6.11 billion to £6.17 billion in the year to the end of January on the back of customers flocking to its website for casual clothes and shoes to wear at home.
Pre-tax profit slipped by 8 per cent to £324 million compared with £348.5 million a year earlier, while headline profit, which excludes writedowns, was £421 million, just shy of the £438 million reported before the crisis.
The business hailed its robust performance as evidence that it was “at the pinnacle of the global sports fashion industry” and estimated headline profit would be in the range of £475 million to £500 million for the year to end of next January.
On the back of the strong results, JD Sports is resuming dividend payments with a 1½p-a-share final payout. Despite being branded a “pandemic winner” Peter Cowgill, executive chairman, said “it is not our intention to repay anything” when it came to following other retailers including the likes of Dunelm which have handed back furlough cash.
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Cowgill, 68, defended the decision to not hand back business rates relief and furlough support and said the dividend reflected the growth of its overseas business, which has been supported by a string of acquisitions and backed by a £464 million share placing in January.
He added that he had been “quite upset about the discrimination that has taken place between non-essential retail and the cookie-cutter approach” and argued that JD Sports needed rates relief because its stores had been shut. “Furlough did what it said on the tin and helped us retain thousands of jobs,” he said. JD Sports will have received about £38 million in business rates relief alone, according to Altus Group, the real estate adviser.
JD Sports has 400 shops in the UK and also owns Size?, Footpatrol, Pretty Green, Blacks Leisure and Millets, as well as Finish Line and Shoe Palace in the US, taking it to a total 2,640 shops around the world.
Cowgill added that when JD Sports shops were allowed to reopen in England and Wales on Monday, customers had “come back in droves, because of natural forces and the frustrations of the last 12 months. Without saying too much, we had good takings. We are one of the most attractive fascias on the high street and we intend to capitalise on that.”
Despite the strength of the retailer, JD Sports had one blackspot on its accounts from a £55.6 million writedown on the value of Footasylum, the smaller retail rival it bought two years ago for £90 million. The deal is being re-evaluated by the competition watchdog after its decision to block the takeover was overturned at appeal. Cowgill said he did not regret the acquisition.
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JD Sports is planning to open a new 65,000 sq ft warehouse near Dublin to smooth supply chain issues following Brexit after running into heavy costs related to the re-importing of goods into the European Union.
Cowgill said the government had been fortunate that “Brexit has been overlooked by the pandemic . . . the problems of Brexit have been buried in the back garden.” He added that the government’s claims of having free trade with the EU were an illusion because goods still faced tariffs when shipped from Asia to stores in Europe. “The word ‘free trade’ was either used because of a lack of understanding or a play on words,” he said.
The shares closed up 27¼p, or 3 per cent, at 940¾p.
