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JD Sports restores outlook as sales start to recover

(Reuters) - Britain’s biggest sportswear retailer JD Sports pointed to an encouraging performance since its shops reopened following coronavirus curbs and felt confident enough to give guidance for the rest of its financial year, sending its shares higher.

People pass a JD Sports store in London, Britain April 11, 2017. REUTERS/Neil Hall/Files

A combination of pent-up demand, particularly in areas where online sales are less prevalent, and discounts helped to boost sales in reopened stores, JD said.

It also reported an “excellent performance” in the United States helped by sales at Finish Line and JD.

Pretax profit sank 68% to 41.5 million pounds for the six months ended Aug. 1, but JD predicted full-year headline pretax profit would be at least 265 million pounds ($349 million).

The company reported profit before tax and exceptional items of 438.8 million pounds in the year to Feb. 2020.

JD said it would not pay an interim dividend.

“While the headline figures are down, there are clear signs in JD Sports’ interim results that it is recovering from the crisis,” eToro analyst Adam Vettese said.

Shares in the FTSE-100 listed company jumped 7% to 775 pence by 0920 GMT.

While footfall in the UK improved in August, sales were still below pre-pandemic levels leading to a devastating effect on local economies, according here to the British Retail Consortium.

Britain has been encouraging people to get back to their places of work to revive the economy, as British chains like Pret A Manger and Marks and Spencer have had to lay off thousands of staff.

However, retailers including Frasers, Primark and Ted Baker have lately guided to improving sales.

“Retail footfall remains comparatively weak and the recent strengthening of measures in many countries and the subsequent temporary closure of some stores reminds us that COVID-19 remains an ongoing challenge,” JD Chairman Peter Cowgill said.

It flagged the risk of having to pay duties as the UK’s transition period with the European Union is set to end later this year, and said it was establishing a more permanent European supply chain infrastructure.($1 = 0.7601 pounds)

Reporting by Tanishaa Nadkar in Bengaluru; Editing by Patrick Graham and Keith Weir