JD Sports half-year profits slide as store footfall remains "weak"

JD Sports has warned that retail footfall remains “weak” in its physical stores and increased costs caused by higher online sales have weighed down on half-year profits.

The sportswear giant said its pre-tax profits for the six months to 1 August slipped by 68% to £41.5 million.

Meanwhile, it posted revenues of £2.54 billion, down from £2.71 billion for the same period last year, after it was forced to shut its stores due to lockdown.

Peter Cowgill, executive chairman, said he has been encouraged by the performance of stores since they reopened, with positive trading in the first weeks of the current half-year.

“However, 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,” he added.

Yesterday Springboard revealed that footfall across all retail destinations rose by a mere 0.4% in the week of 30 August to 5 September 2020 as Britons started to return to work and city centres. While the footfall picture is gradually improving Greater London’s high streets remain 40.9% lower than last year, 51.9% lower in Central London and 39.5% lower in the UK regional cities.

Cowgill told investors that the company now expects to deliver a headline profit before tax of at least £265 million for the current full year.

The company said it retained “significant” sales during the period of store closures as customers moved online, but saw profitability pressed down by additional online costs.

JD Sports said initial trading in stores after reopening was boosted by a “combination of pent-up demand and promotional activity”, but this was “generally short lived” as retail footfall remained weak.

The company said it was encouraged by “generally resilient” trading in its UK and Ireland business, but said attracting footfall into shopping centres “remains a significant challenge”.

Cowgill added: “Ultimately, given the unique circumstances of this trading period, we are reassured by the strength of the JD brand as demonstrated by the retention of more than 90% of the total revenues.

“However, it should be recognised that this has necessitated additional costs principally relating to the provision of enhanced health and safety measures, in all areas of the business, together with increased costs of online fulfilment, including performance marketing.”