JD Sports to reinstate dividend to same level as 2019
JD Sports (LON:JD) is expecting its profit for the coming year to surpass its level before the pandemic in its end of year report as the company announced it will be resuming its dividend payments.
For the financial year ahead, ending in January 2022, JD Sports is expecting to make a profit before tax in the range of £475m to £500m, a rise from its previous forecast of £440m-£450m.
The revised estimate has taken into account a number of recent acquisitions by the sports fashion brand.
For the year ended in January 2021, its sales came in at £6.17bn, slightly up from the previous year, While its profit before tax was £421m, in line with its estimates, and just shy of the £438m announced prior to the pandemic.
The FTSE 100 firm will pay out a final dividend of 1.44p per share, the same as in 2019, however it has not offered to return any of the government’s assistance even though JD Sports is ending the year with £800m in net cash.
Harry Barnick, senior analyst at Third Bridge commented on the strength of the results in the midst of the crisis:
“2020 has been a dire year for UK retail, with an unprecedented double-digit decline across in-store sales,” said Barnick.
“Against this backdrop, JD Sports has performed remarkably, reflecting some of the retailer’s key strengths. JD Sports has a relatively high share of online sales as well as a tight inventory management system and these factors softened the blow of 2020’s pandemic. It allowed sales to continue as stores were closed and supported gross margins, allowing the group to retain its high profitability from the prior year.”
“The next few months will be crucial for JD Sports as it seeks to capitalise on the forecasted pent up demand for retail.”
“Global apparel brands such as Nike and Adidas have been decluttering their distribution network, reducing the number of small and underperforming stockists they rely on. At the same time, they have been clear that they will partner more closely with large omnichannel retailers and JD Sports is likely to benefit from this trend.”