JD Sports is delaying its vacation pay repayment decision despite its profit forecast raised following the boom in sales
- The retailer expects to see pre-tax profits of no less than £ 550 million this year
- The delay in the decision is due to rising Covid rates and uncertainty about restrictions
- On Monday, JD Sports announced that it had spent £ 120 million on a stake in retailer Deporvillage
JD Sports has announced that it will decide later on whether to repay the government’s Covid support, although its annual profit outlook has been raised after a period of high sales.
The sporting goods retailer expects to post a pre-tax profit of “no less than” £ 550million this fiscal year, compared to its previous forecast of between £ 475million and £ 500million and the £ 324million it made last year.
However, due to the recent surge in coronavirus infection rates and the possibility of further temporary store closures, it is set to postpone its decision on repaying the vacation pay requested by the UK government.
Upgrade: JD Sports expects pre-tax profit for this fiscal year to be “no less than” £ 550 million compared to its previous forecast of £ 475 million to £ 500 million
There needs to be more clarity about the extent of the lockdown restrictions, especially during the heavy winter trading period, before a final decision on vacation pay return is made.
The announcement by JD Sports comes just days after it was revealed that it had spent £ 120 million to buy an 80 percent stake in Spanish online sports company Deporvillage.
That followed earlier this year following purchases of Baltimore-based sportswear brand DTLR Villa for $ 495 million (£ 355 million) and a 60 percent stake in Polish clothing retailer Marketing Investment Group.
Meanwhile, it has been reported that trading in the UK has been “particularly encouraging” since lockdown restrictions were relaxed, while most of the 3,300 stores worldwide are now open across the Asia-Pacific region except for a few.
Online demand has also increased, as has sales in the United States, which JD Sports credits many Americans with taking part of the $ 600 it received from the US $ 900 billion stimulus package passed last December US dollars received in their stores.
The group now has 60 stores in the country under the JD Sports name, having recently opened five stores and remodeled another six that previously traded under the Finish Line brand.
Expansion: JD Sports announced this week that it had spent £ 120 million to purchase an 80 percent stake in Spanish online sports company Deporvillage
“We recognize that maintaining sales during the period of stores closed, combined with positive trading in the immediate post-reopening period, has helped offset the negative financial impact associated with the period of temporary closings,” noticed the company.
“However, we also have to acknowledge that the uncertainty surrounding Covid is not yet completely over and the current rise in infection rates is affecting our core demographic group of our customers more than before.”
However, JD Sports today confirmed that it plans to split up Peter Cowgill’s roles as Executive Chairman and Chief Executive prior to the next AGM and begin a “comprehensive process” shortly.
Criticism: AJ Bell’s Russ Mold said JD Sports should “really use its online operations money to help disrupt its store and not rely on government handouts”.
It said it accepted that the composition of the group’s board of directors should reflect “the current size, dynamism and global positioning” of the company and its higher market valuation.
Russ Mold, investment director of AJ Bell, described JD Sports’ refusal to return vacation pay despite its high profit forecast as “shameful”.
He added, “It is even more of an insult that it is still waiting its time to make a firm decision or not whether to return the money.
‘This is an incredibly successful business that is generating considerable sums of money. The vacation program was launched to help businesses through dark times, but JD Sports is one of many companies that have succeeded in selling online during the pandemic.
“So it should really use money from its online operations to help disrupt its business premises and not rely on government lore. Shareholders should insist that the company pull up its socks and return the money. ‘
JD Sports shares rose 2.8 percent late this morning to reach 944.4 pence.