JD Sports Profits Plummeted 68% — Here’s Why It Still Thinks It Can Meet Its Financial Goals This Year
Despite a decline in first-half profits and sales, JD Sports Fashion Plc is reaffirming its outlook for the fiscal year.
The British sportswear retailer today logged a 68% drop in its income to 41.5 million pounds, or $54.1 million at current exchange, for the six months ended Aug. 1. Revenues also fell nearly 6.5% to $2.54 billion pounds, or $3.31 billion.
However, the company’s top management said that it was “reassured” by the strength of the JD Sports brand. Reinstating its guidance for the full year, it predicted 2020 pretax profits of at least 265 million pounds, or $345.5 million. The Greater Manchester-based chain also attributed its reduced profitability to additional costs associated with a shift to online channels.
“We are generally encouraged by our performance since the stores reopened and with our performance in the first few weeks of the second half,” executive chairman Peter Cowgill explained in a statement.
He added, “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. Nonetheless, we remain absolutely confident in our strengths in consumer engagement, key brand relationships and globally consistent multichannel retail standards. These, combined with an agile operational infrastructure, provide us with a robust platform for further positive development.”
As mandated by state and local governments, JD Sports and Finish Line stores began to temporarily shutter in mid-March across the United Kingdom, as well as other parts of Europe, Asia, Australia and the United States. These outposts started reopening in late April, with most locations having resumed business by the end of June.
According to the company, sales were bolstered by a combination of pent-up demand and promotional activity. This boost, however, was “generally short-lived” as foot traffic at brick-and-mortar units continue to be “significantly weaker than historic levels” in all of the retailer’s geographies, particularly across Europe.
But in the U.S., JD Sports noted an “excellent performance” through its namesake and Finish Line banners, citing “enhanced consumer demand” following the massive federal stimulus package that was enacted in late March. The chain shared that the $600 weekly unemployment bonus on top of state benefits, which expired at the end of July, led consumers to shop athletic apparel, footwear and accessories as they remained indoors due to the ongoing coronavirus pandemic.
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