JD Sports investors hope for robust trading under new leadership

Investors will be hoping JD Sports can provide reason for optimism when it updates the markets next week after a turbulent year so far and growing concerns over consumer budgets.

Shares in the sportswear giant have slipped by 40% over the past 12 months after the challenging period, which included pressure from regulators and the departure of its long-standing boss.

The group is expected to unveil a slight fall in profits when it reveals its performance for the first-half of its financial year on Thursday September 21.

Analysts have predicted the company will report a pre-tax profit of £380 million for the six-month period, compared to £440 million in the six months to July 2021.

Investors are prepared for a cooling in profits, as consumers come under pressure for soaring household bills, and inflation continues to grip retailers.

But they will still be keen for JD Sports’ new leadership to outline its plans to boost profitability in the medium term.

Last month, the firm confirmed the appointment of former B&Q executive Regis Schultz as its new chief, forming a new top executive team alongside chairman Andrew Higginson.

It came after long-time executive chairman Peter Cowgill resigned in May after the company was hit with a £4.3 million fine for sharing commercially sensitive information with Footasylum, the rival it was seeking to buy in a £90 million deal.

Mr Cowgill had met his opposite executive at Footasylum in a Bury car park to exchange information, according to a video seen by the Sunday Times.

The Competition and Markets Authority (CMA) argued there was a “black hole” surrounding the meeting as neither could remember “crucial details” about the exchange and reported no notes, agendas or emails afterwards.

JD was also forced to sell Footasylum at a more-than £50 million loss after the competition watchdog blocked the move over concerns it could lead to a worse deal for shoppers.

Peel Hunt analyst Jonathan Pritchard has said he believes the company might have turned a corner.

Mr Pritchard said the appointment of Mr Schultz “adds many strings to JD’s bow” including experience in Asian markets and increased “digital know-how”, while it will also benefit from an end to boardroom uncertainty.

The analyst was positive as he said the group was likely to “show robust recent trading and good profit delivery” in the update, as profits from the same period last year were buoyed by pandemic-driven financial support packages.

Like-for-like sales improved by 5% in the first five months of the financial year, the group announced in its previous update, but shareholders will also be keen to see that consumer demand has not softened further over inflation concerns.

AJ Bell’s Danni Hewson said investors will “continue to fret about the cost-of-living crisis, how it may affect sales of trainers and athleisure wear and therefore impact JD Sports’ business, although there is little sign of JD taking a hit, at least so far”.