JD Sports backed annual guidance on a day that brought mixed reports on the UK’s wider retail sector.
Ahead of the athleisure retailer’s annual general meeting on Friday, JD Sports said sales up to late June, the first five months of its financial year, were 5% higher annually on a like-for-like basis.
It backed full-year guidance, expecting headline pretax profit before exceptional items for the current financial year ending January 28 to be ‘in line’ with financial 2022 year. Pretax profit before exceptional items more than doubled to a record £947.2 million in financial 2022 from £421.3 million in financial 2021.
JD Sports also updated on governance matters, following a ‘three-month intensive programme of works’.
‘The group has now commenced a control, risk and compliance target operating model review. The output from this will be a detailed plan and resource requirements assessment for a programme of works which will ensure compliance with the various regulatory obligations and greater conformity with the Corporate Governance Code,’ it said.
Earlier in July, JD Sports named Andy Higginson as chair. It is still on the hunt for a chief executive. In May, Peter Cowgill, then executive chair, left the company. JD Sports in July 2021 had bowed to shareholder pressure over its corporate governance, agreeing to split Cowgill’s controversial joint role of chair and CEO.
The update from JD Sports came as figures as UK retail sales data for June painted a mixed picture, with the sector seeing a slight Platinum Jubilee holiday boost. The cost-of-living crisis also was evident, however.
According to the Office for National Statistics, UK retail sales volumes fell 5.8% annually in June, worsening from a 4.7% decline in May. The figure was worse than the FXStreet-cited market consensus of a smaller 5.3% fall.
On a monthly basis, sales fell 0.1% in June from May. In May, they had fallen 0.8% from April, and that figure was downwardly revised from a 0.5% fall.
Excluding fuel, retail sales fell 5.9% yearly in June, following a 5.5% decline in May. June’s figure, though worse than May’s, beat an FXStreet-cited forecast of a 6.3% decline.
On monthly basis, fuel-excluded retail sales were 0.4% higher, defying expectations of a 0.4% decline, and swinging from a 1% fall in May.
Ahead of the retail sales data, a report early Friday showed consumer confidence in the UK remains ‘severely depressed’ as households grapple with soaring food and fuel prices. GfK’s long-running consumer confidence index languished at a historic low of minus 41 in July.
JD Sports shares were down 1.3% early Friday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: flat at 7,270.62
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Hang Seng: up 0.1% at 20,593.03
Nikkei 225: closed up 0.4% at 27,914.66
S&P/ASX 200: closed marginally lower, down 2.80 points at 6,791.50
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DJIA: closed up 162.06 points, or 0.5%, at 32,036.90
S&P 500: closed up 39.05 points, or 1.0%, at 3,998.95
Nasdaq Composite: closed up 161.96 points, or 1.4%, at 12,059.61
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EUR: up at $1.0201 ($1.0195)
GBP: up at $1.1974 ($1.1958)
USD: down at JP¥137.71 (JP¥137.93)
Gold: up at $1,718.15 per ounce ($1,710.60)
Oil (Brent): up at $105.32 a barrel ($103.48)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday’s key economic events still to come
0930 CEST Germany flash composite purchasing managers’ index
1000 CEST EU flash composite PMI
0930 BST UK S&P Global-CIPS flash composite PMI
1100 BST Ireland wholesale price index
0945 EDT US flash manufacturing and services PMI
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The final two vying to be the next UK prime minister have come to blows over their fiscal proposals, with Rishi Sunak warning against a ‘huge borrowing spree’ as Liz Truss defended tax-cutting plans worth at least £30 billion a year. The former chancellor did not pull any punches in an interview on Thursday evening, claiming the current evidence suggests the Conservatives would suffer a defeat at the next UK general election under his rival’s leadership. Sunak said he thought borrowing £30 billion for unfunded tax cuts would be ‘inflationary’, adding that going on a ‘huge borrowing spree’ would only ‘make the situation worse’. He told Tonight With Andrew Marr on LBC: ‘If you look at all the polling evidence that we have, and you see what that says, it’s pretty clear that I am the person that is best placed to defeat Keir Starmer in the next election.’ Earlier, Truss defended her tax cut plans as ‘affordable’, as the economic policies of the two candidates came under scrutiny. ‘What is not affordable is putting up taxes, choking off growth, and ending up in a much worse position,’ she told broadcasters during a visit to Peterborough.
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An agreement to facilitate Ukrainian grain exports through the Black Sea is due to be signed in Istanbul by UN Secretary General Antonio Guterres, Turkish President Recep Tayyip Erdogan and representatives of Russia and Ukraine on Friday. The deal, which aims to bring a fast-worsening global food crisis to an end, provides for the creation of a United Nations-run control centre in Istanbul staffed by representatives of Russia, Ukraine and Turkey to oversee grain exports. The parties have reportedly agreed that ships bound for Ukraine will first be searched to ensure no weapons or other military equipment are on board. Searches are also to take place when ships carrying grain from Ukrainian ports want to pass through the Bosphorus Strait in the other direction.
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BROKER RATING CHANGES
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Bernstein raises Unilever to ’outperform’ (market-perform) - price target 4,280 (3,300) pence
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JPMorgan cuts Quilter to ’neutral’ (overweight) - price target 115 (180) pence - places on ’negative catalyst watch’
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RBC cuts Fevertree Drinks to ’underperform’ (sector perform) - price target 700 (1,600) pence
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COMPANIES - FTSE 100
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BT received a boost after a planned sports broadcasting joint-venture with Warner Bros Discovery was given a regulatory green light. The UK Competition & Markets Authority has opted not to refer BT’s sports joint-venture with Warner Bros Discovery to a phase two probe. In May, telecommunications firm BT agreed to a sports broadcasting JV with Warner Bros Discovery. The 50-50 JV will see BT Sports and Eurosport combine. In response, BT said the creation of the JV will be completed in coming weeks. ‘It’s great news that the CMA has approved the new JV that we are forming with Warner Bros. Discovery, combining the very best of BT Sport and Eurosport UK, to create an exciting new offer for live sport programming in the UK,’ said Marc Allera, CEO of BT’s Consumer division and the designated chair of the JV. ‘Today is a huge milestone, as we now look toward day one of the new business, which we hope to be in the coming weeks.’
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COMPANIES - FTSE 250
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Insurer Beazley said it ‘maintained the momentum of the second half of 2021’ during the first six months of 2022. Gross written premiums increased 26% yearly to $2.55 billion from $2.04 billion. However, pretax profit declined 87% to $22.3 million from $167.3 million. Expenses increased 23% to $1.59 billion, figures showed. That number includes a 22% rise in net insurance claims to $969.6 million. ‘A challenging investment environment has impacted profit; however I’m delighted that we have achieved our best combined ratio at a half year since 2015,’ Chief Executive Officer Adrian Cox said. The combined ratio improved to 87% from 94% a year prior. Any ratio below 100% signifies an underwriting profit, so the lower the better.
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Jersey-based fund manager JTC is ‘confident’ of meeting market expectations in 2022. JTC said it is ‘delivering within all of its well-established guidance metrics’, including net organic revenue growth between 8% and 10%, and an underlying earnings before interest, tax and depreciation margin of 33% to 38%.
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COMPANIES - SMALL CAP
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Currency manager Record said assets under management equivalents edged lower in the financial first quarter that ended June 30. They fell 6.3% to $77.9 billion from $83.1 billion at the end of March. ‘As expected, uncertainty in financial markets linked to both economic and heightened political pressures has continued to have an impact on the value of some clients’ underlying portfolios, primarily within our Passive Hedging product,’ CEO Leslie Hill said. Market movements detracted $3.9 billion from AUME, while foreign exchange movement and mandate volatility targeting caused a $3.3 billion hit.
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Friday’s shareholder meetings
Chesterfield Resources PLC - AGM
Homeserve PLC - GM re offer by affiliates of Brookfield Infrastructure Partners
JD Sports Fashion PLC - AGM
Landore Resources Ltd - AGM
President Energy PLC - AGM
United Utilities Group PLC - AGM
WANdisco PLC - AGM
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