JD Sports Fashion Plc - AGM Trading Update
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JD Sports Fashion Plc
AGM Trading Update
Peter Cowgill, the Executive Chairman of JD Sports Fashion Plc (the "Group"), the leading retailer of sports, fashion and outdoor brands, will make the following trading statement to shareholders attending its AGM today.
After the acquisitions in the year of DTLR Villa LLC in the United States and Marketing Investment Group S.A. in Central Europe, the Group now has approximately 3,300 stores across 29 countries. Substantially all of the stores are now trading although we continue to experience some temporary closures in parts of the Asia Pacific region.
In those markets across Europe where stores were closed in the early part of the year we saw sales retention slightly ahead of that seen in the first closure period in Spring 2020. Trading in the immediate period after reopening was particularly encouraging in the UK as both loyal and new consumers, seeking to refresh their personal style as hospitality and workplaces began to reopen, reacted positively to JD's innovative and exciting product mix. Consistent with other retailers, store footfall remains fragile with online traffic at elevated levels.
In the United States, a second round of fiscal stimulus was introduced by the Federal Government in March. As with the first round of fiscal stimulus last year, this was paid directly to individuals as opposed to supporting the cost base of corporates. As a consequence, this has resulted in enhanced levels of consumer demand across all of our businesses. The JD fascia continues to make positive progress in the United States with 60 stores now trading following the opening of five new stores and the conversion of a further six stores which previously traded as Finish Line. It is still our intention to convert approximately 50 stores from Finish Line to JD during the current financial year.
A number of countries, including the UK, have offered further support to corporates this year to help cover the fixed costs of physical retail, including salaries, while stores have been unable to trade. The Group accepted this support where it has been offered, using it for the purposes intended. In particular, payments from the Job Retention Scheme in the UK helped ensure that the thousands of people that we employ continue to be supported and have sustainable and long term employment prospects with our business.
As has been the case throughout the period of the pandemic, our priority remains the health and wellbeing of our global workforce. We remain focussed on the long term future and ongoing expansion of the Group and our ability to offer jobs and career development opportunities to young people throughout our business continues to be a key part of this strategy. The latest example of this is the 1,228 young people who we are currently recruiting across the UK on the Government's Kickstart scheme. We are very proud to be involved in such a positive initiative which provides employment opportunities for young people who were previously on Universal Credit and who faced significant barriers to employment as a result of the pandemic.
We are cognisant that the retention of sales in the period when the stores were closed combined with the positive trading in the immediate period after reopening did help to offset the negative financial impacts associated with the period of temporary closures. However, we must also acknowledge that the uncertainty surrounding COVID has not yet fully passed and the current resurgence in infection rates is affecting our core customer demographic more than was the case previously. Accordingly, we will consider repaying government support on payroll costs which we have received whilst stores have been temporarily closed during the current year. We will defer a final decision on this until there is certainty on both the full easing of restrictions and the consequences of any further lockdowns during our peak trading period this Winter.
Update on Governance Matters
With regard to governance matters, we would like to clarify the following points:
- In conjunction with the Board's succession planning and to strengthen the depth of the management team it is our intention to divide the current role of Executive Chairman and CEO before the next Annual General Meeting and a comprehensive process will commence shortly.
- We fully accept that the composition of our Board should reflect the current scale, momentum and global positioning of the Group as well as its increased level of market capitalisation. In addition, the Board fully supports the initiatives driven by the Hampton-Alexander Review and the Parker Review and acknowledges the need to create additional diversity within its membership. We are also mindful that certain Board members have served on the Board for longer than the recommended period of tenure within the Corporate Governance Code. The Board, therefore, recognises the need to address its composition as soon as possible and have invited the independent non-executive directors to commence the selection process and make recommendations to the Nominations Committee.
While we must recognise the risk of further temporary store closures across our global estate and the potential repayment of government support to payroll costs in the current year, we presently believe that the Group is on track to deliver profit before tax and exceptional items for the full year at an increased level of no less than £550 million.
The Group will announce Interim Results for the period to 31 July 2021 on 14 September 2021.