Retail

JD Sports calls for ‘fairness’ in lease arrangements


JD Sports, the self-proclaimed “King of Trainers”, has become the latest retailer to demand “fairness and flexibility” in its store leasing agreements as weaker players use insolvency laws to secure reduced rents.

“We are very aware of the financial benefit that other retailers appear to get when they downsize their estates,” the company said. “Whilst we have no plans to fundamentally alter the size of the JD store network in the UK at this time, we continue to seek fairness and flexibility in the terms of our leases”.

The company, whose UK same-store sales surged 10 per cent in the first half of its financial year, is one of the few still expanding its physical space in the UK, opening four new stores in the period.

Despite strong sales growth in the UK and Europe, it said the adoption of new accounting standards would limit the rise in profits over the full year.

The company will adopt IFRS 16, a new accounting standard requiring leases to be recognised as a liability on the balance sheet, with effect from the current reporting period. This will limit full-year profit to the midpoint of market expectations, currently around £413m.

“The board is confident that, without the impact from the transition to IFRS 16, the group would have been on track to deliver headline profit before tax for the full year at the top end of market expectations,” it said.

Revenue increased 47 per cent, reflecting the strong sales growth in the UK and Europe and a full six months of trading at Finish Line in the US, which only contributed for six weeks of the same period a year ago. Reported pre-tax profit rose 6.6 per cent to £130m. 

The company entered the FTSE 100 index earlier this year. Its market value, at £6.3bn, is over four times that of its biggest UK rival Sports Direct.



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