JD Sports Fashion Plc (LON:JD), a leading retailer of sports, fashion and outdoor brands, has announced its Final Results for the 52 weeks ended 1 February 2020 (2019: 52 weeks ended 2 February 2019).
| Impact of IFRS 16 Transition | 2020 IFRS 16 | 2019 IAS 17 | |||
| Proforma IAS 17 | Adjustment | ||||
| £m | £m | £m | £m | ||
| Revenue | 6,110.8 | – | 6,110.8 | 4,717.8 | |
| Gross profit % | 47.0% | – | 47.0% | 47.5% | |
| EBITDA before exceptional items* | 623.6 | 356.2 | 979.8 | 488.4 | |
| Depreciation / amortisation | (151.8) | (311.1) | (462.9) | (126.9) | |
| Operating profit before exceptional items* | 471.8 | 45.1 | 516.9 | ||
| Net interest expense | (6.2) | (71.9) | (78.1) | ||
| Profit before tax and exceptional items* | 465.6 | (26.8) | 438.8 | ||
| Exceptional items | (90.3) | – | (90.3) | ||
| Profit before tax | 375.3 | (26.8) | 348.5 | ||
| Basic earnings per ordinary share | 27.44p | (2.15)p | 25.29p | ||
| Adjusted earnings per ordinary share* | 36.41p | (2.15)p | 34.26p | ||
| Total dividend payable per ordinary share | 0.28p | – | 0.28p | ||
| Net cash at period end (a) | 429.9 | – | 429.9 |
a) Net cash consists of cash and cash equivalents less interest-bearing loans and borrowings
b) Throughout this release ‘*’ indicates the first instance of a term defined and is explained in the Glossary at the end of these preliminary results
Group Highlights
· Record result to 1 February 2020 with very strong consumer demand for JD’s multi-channel proposition:
a) Revenue increased by 30% to £6,110.8 million (2019: £4,717.8 million) with strong total like for like sales* growth in global Sports Fashion fascias of 12% including highly encouraging growth of more than 10% in the core* UK and Republic of Ireland Sports Fashion fascias
b) Group EBITDA before exceptional items on a comparable accounting basis* increased by 28% to £623.6 million (2019: £488.4 million) and profit before tax and exceptional items on a comparable accounting basis increased by more than £110 million to £465.6 million (2019: £355.2 million)
c) Reported profit before tax increased by 3% to £348.5 million (2019: £339.9 million), after net adjustments of £26.8 million following transition to IFRS 16 ‘Leases’ and non-cash exceptional items of £90.3 million
· Further international development of JD in the year with:
a) Net increase of 52 JD stores across mainland Europe
b) Net increase of 18 JD stores in the Asia Pacific region
c) JD store base in the United States increased to 11 stores with the first flagship store in Times Square, New York, anticipated to open later in the summer
· Encouraging performance in the United States with operating profit before exceptional items on a comparable accounting basis of £97.9 million (2019: £26.6 million for the 33 weeks post acquisition) driven by:
a) Like for like sales growth for the proforma 52 week period across the combined Finish Line branded stores and website of 9%
b) Gross margin increased to 42.9% (proforma 52 weeks to 2 February 2019: 42.2%)
· Net cash at the end of the period, being the high point of the working capital cycle, of £429.9 million (2019: £125.2 million)
Period to 2 February 2019
| Sports Fashion IAS 17 £m | Outdoor IAS 17 £m | Unall IAS 17 £m | Total IAS 17 £m | ||||
| Revenue | 4,296.4 | 421.4 | – | 4,717.8 | |||
| Gross profit % | 48.0% | 42.5% | – | 47.5% | |||
| EBITDA before exceptional items | 478.4 | 10.0 | – | 488.4 | |||
| Depreciation | (105.1) | (9.8) | – | (114.9) | |||
| Amortisation | (7.5) | (4.5) | – | (12.0) | |||
| Operating profit / (loss) before exceptional items | 365.8 | (4.3) | – | 361.5 | |||
| Net interest expense | – | – | (6.3) | (6.3) | |||
| Profit/ (loss) before tax and exceptional items | 365.8 | (4.3) | (6.3) | 355.2 | |||
| Exceptional items | (13.7) | (1.6) | – | (15.3) | |||
| Profit/ (loss) before tax | 352.1 | (5.9) | (6.3) | 339.9 | |||
| Update on COVID-19 |
· COVID-19 continues to affect our commercial operations and will have a material impact on the Group’s results for the period to 30 January 2021:
Period of Store Closures
a) Italy was the first country to experience closures on 11 March 2020, quickly followed by a number of other markets across Western Europe and the United States
b) By 23 March 2020 we had a full closure of our retail portfolio in 14 countries representing more than 98% of the Group’s physical store estate
c) Online trading remained open in most territories and has delivered a very resilient performance during the closure period and beyond with consumers clearly still attracted to JD’s premium multi-branded proposition
d) Further mitigation provided through public sector support in various territories together with internal ‘self-help’ initiatives
Period since Re-opening
e) Stores began to re-open in some countries from the end of April with the majority of the Group’s stores now trading again
f) Initial footfall has been weaker in malls and shopping centres, particularly in Northern Europe at weekends, as consumers remain nervous about the risks associated with densely occupied enclosed spaces
g) Stores operating in line with local legislation on social distancing and personal protective equipment
h) Reduced footfall partially offset by stronger conversion with consumers currently less inclined to browse
Peter Cowgill, Executive Chairman, said:
“Whilst COVID-19 has constrained our short term progress, it is important that we do not lose sight of the core retail standards and commercial disciplines which have underpinned our longer term growth to date. JD Sports Fashion has a market leading multi-channel proposition which maximises its consumer relevance and reach by creating, and then maintaining, a deep emotional connection with its consumers who see JD as an authoritative and trustworthy source of style and fashion inspiration with influences drawn from both sport and music.
“This proposition remains extremely robust and, in that regard, I am pleased to report that it was another year of significant progress for the Group with global revenues increasing by 30% to £6,110.8 million (2019: £4,717.8 million) and the headline profit before tax and exceptional items increasing by a further 24% to £438.8 million (2019: £355.2 million). This represented another record result for the Group.
“We were encouraged by the continued positive trading in the early weeks of the year prior to the emergence of COVID-19 and we firmly believe that we are well placed to regain our previous momentum. Looking longer term, there is inevitably considerable uncertainty as to what the effect of COVID-19 will be on consumer behaviour and footfall with future store investments highly dependent on rental realism and lease flexibility. Ultimately, however, we remain confident that we have a market leading multi-channel proposition which has the necessary flexibility and agility to prosper within a retail environment that may see profound and permanent structural change.”
