JD Sports doubles previous profit record while search for CEO advances
JD Sports doubled its previous profits record in the year to 29 January 2022 achieving headline profit before tax and exceptional items of £947.2 million (2021: £421.3 million); the previous record of £438.8 million was set in the period to 1 February 2020.
Interim chair Helen Ashton hailed the year, in which sales reached £8.56 billion (2021: £6.17 billion), as one of "outstanding progress" for the sports and fashion giant.
In the UK and Republic of Ireland profit before tax and exceptional items increased to £471.2 million (2021: £262.7 million; 2020: £288.5 million) which was attributed to "a strong retention of sales through digital channels" in the first quarter of the financial year while its stores were temporarily closed, due to lockdown, combined with strong demand after reopening.
North American profit before tax and exceptional items increased to £343.0 million (2021: £171.9 million; 2020: £94.2 million) which includes contributions of £57.3 million (2021: £13.9 million in the six-week period after acquisition) from Shoe Palace and £50.6 million from DTLR (46-week period post acquisition). All of the Group’s businesses successfully capitalised on the favourable trading conditions provided by a second round of fiscal stimulus from the US Federal Government, it said.
Its outdoor division returned to profit due to strong demand for holidays in the UK coupled with "a general recognition of the physical and mental health benefits of spending time outdoors" with a profit before tax and exceptional items of £25.9 million (2021: loss of £6.1 million).
"[These results] demonstrate our capacity for growth in both existing and new markets, and the strength of our global proposition and consumer engagement in store and online," said Ashton.
But the year hasn't been without its challenges. The group was ordered by the Competiton and Markets Authority to dispose of 2019 acquisition Footasylum and governance issues arose, leading to its former executive chairman Peter Cowgill departing last month.
The company had already revealed the Cowgill's role would be split and that it would be searching for a new CEO but the long-standing executive stood down last month (reportedly as the request of largest shareholder Pentland Group) after the business was fined in February following reports of Cowgill having met his opposite number at Footasylum Barry Bown in a carpark, after the CMA ruled the the businesses should not share commercially sensitive information while it was investigating the buyout.
In at statement the JD board also revealed that the initial plan for Cowgill to have a substantial handover period with any new CEO, before retreating to the role of chairman, was not popular with potential incoming CEOs who wanted a short handover.
The board said: "At its 2021 AGM on 1 July 2021, the Group announced, with the support of Peter Cowgill, that it intended to divide the role of Executive Chair and Group CEO before the 2022 Annual General Meeting. At that time, it was intended that this would be achieved through the appointment of a new Group CEO with Peter Cowgill then moving into the role of Chair with a progressive handover of executive management responsibilities. In due course, Peter Cowgill would then have been replaced by a Non-Executive Chair.
"Working with Spencer Stuart the Group commenced a global search for a new Group CEO. A number of excellent candidates were attracted to this role but a recurring theme was a wish for a much shorter handover period. This search process also coincided with the governance and assurance workstreams referred to above and it is the Board's view that the new CEO should have the opportunity to shape that process. Accordingly, the Board decided to accelerate the separation of the roles of Chair and Chief Executive Officer and Peter Cowgill left the Group on 25 May 2022. Subsequently, Helen Ashton accepted the role of Interim Non-Executive Chair with Kath Smith, Senior Independent Director, appointed as Interim CEO."
Ashton said a number of high calibre candidates were in the running for the role of CEO and were at different stages of consideration. The process of recruiting a new chair was also progressing "at pace" she said, adding: "Meanwhile, the Board is happy with how the interim arrangements are operating and will update the market on the progress of these search processes as appropriate.
She added: "JD is a globally recognised iconic multichannel retailer with a proven strategy, clear momentum and a talented and resilient senior management team who are recognised within the sports fashion industry as some of the leading figures in their fields. The Board and senior management team are united in their determination to build on the historical successes with the same laser focus on the consumer, commercial rigour, attention to service excellence and analytical intensity."
While the business was "encouraged" by demand in the financial year to date, it said it was "conscious of the headwinds that prevail at this time including the general global macro-economic and geopolitical situation." It has given guidance that profit before tax and exceptional items for the year end 28 January 2023 "will be in line with the record performance for the year ended 29 January 2022".
