JD Sports shares higher after lifting profit guidance

Shares in JD Sports (LON:JD) were trading near the top of the FTSE 100 on Thursday after the company lifted its full year profit guidance following a strong start to the year.

The company said in European markets where there had been store closures in the early part of the year, sales retention was still ahead of the first closure period in Spring 2020.

The sportswear retailer said trading following reopening was “particularly encouraging” in the UK as hospitality and workplaces began to reopen. However, they cautioned that store footfall remains fragile with online traffic at elevated levels.

Government support
The company has benefitted in the US from the stimulus checks paid directly to individuals rather than supporting the cost base of corporations.

JD Sports said this has resulted in enhanced levels of consumer demand across all their businesses.

In relation to money used from the government’s job retention scheme, JD Sports has said they will consider repaying the government support but will defer any decision until there is certainty on both the full easing of restrictions and the consequences of any further lockdowns during peak trading conditions in Winter.

The news has not gone down well with AJ Bell investment director Russ Mould who called the decision not to repay the money from the furlough scheme “disgraceful”.

“In a world where doing the right thing has never been more important for companies on the stock market, JD Sports is pushing its luck when it comes to certain issues,” Mould said.

“It should really use money from online operations to support disruption to its store estate, not rely on Government hand-me-downs.

“Shareholders should be pushing for the company to pull up its socks and give that money back.”

Despite the caution surrounding Covid and the resurgence in cases among JD Sports’ key demographic, the company was still happy to lift its profit cost, saying it is on track to deliver profit before tax and exceptional items for the full year at an increased level of no less than £550mln, up from £324mln last year.

At 10:29BST, shares in JD Sports were trading higher by 3.6% at 952.4 pence per share.