JD Sports restarts dividends but refuses to return taxpayer cash

JD Sports has restarted dividend payments to shareholders after profits were shored up by bumper lockdown demand for trainers and hoodies, but says it has no plans to return taxpayer cash.

The sportswear group reported robust sales, and profits within touching distance of those banked in the year before the pandemic struck, as shoppers switched to its websites when high streets were closed.

Pretax profits before one-offs came in at £421m on sales that were up slightly at £6.2bn in the year to 30 January. However, despite the strong performance Peter Cowgill, JD’s executive chairman, said the company would not be repaying government cash.

Furlough cash had “done what it was intended to do” as it had saved the jobs of thousands of people who worked in its stores, Cowgill said. “Whilst it has helped us it has also prevented a large taxpayer burden from unemployment,” he said.

JD, which finished the year with almost £800m in the bank, did not quantify how much financial help it had received. The business rates holiday was worth £38m to JD, according to the property advisors Altus Group, while HMRC data shows the company claimed between £6m and £12.5m in December and January.

JD, which also owns Size?, Blacks Leisure, Millets and Go Outdoors as well as Finish Line in the US, said its shareholder payments had resumed with a final dividend payment of 1.44p a share worth £14.8m.

Labour MP and tax campaigner Margaret Hodge said the emergency support schemes were supposed to save businesses and “certainly not intended to pay generous dividends”.

“It shows a failure of design and a ruthless disregard for taxpayers in the middle of a pandemic,” Hodge added.

Cowgill instead pointed the finger at essential retailers, whose stores stayed open during the lockdowns, and who, he felt, should return the business rates relief.

The major supermarket chains as well as B&M and Aldi, which all benefited from being classed as essential retailers, have handed back nearly £2bn to the taxpayer. However, others including the John Lewis Partnership, which owns Waitrose, Marks & Spencer and the Co-op have hung on to the payments.

“If I had been selling two cans of Coke and a packet of crisps at the front of the store I’d have been able to sell clothes,” said Cowgill. “There was a lot of inverted-commas ‘essential retailers’ selling clothes and I don’t feel too good about it.”

JD’s shares closed up 3% at 940.8p having set new all time highs in recent days. Just before the pandemic hit last year the shares were changing hands at about 880p, before crashing to 293p in March as lockdown loomed.

As shops reopened in England and Wales on Monday JD’s stores were among those to attract the biggest queues as young shoppers clamoured to get their hands on limited-edition trainers.

Cowgill said trading had been “terrific”, with the queues demonstrating that as far as retailing goes JD is “in the Premiership with the likes of Primark and Zara”.

JD also upped its profits forecast for the coming year to between £475m and £500m, compared with a previous guide of £440m to £450m. Amisha Chohan, a Quilter Cheviot analyst, said it had not been surprising that demand for athleisure gear had “remained high in a year where we were told to both stay and work from home”.