Rudderless JD Sports Fashion PLC (LSE: JD.) Has apparently rejected uncertainties and fresh analysis, and the so-called ‘King of Coaches’ today impressed the market with record trading results.
Retail stocks rose some 7% to 114.2p, despite revelations that after the removal of Peter Cowgill from the position of CEO and chairman, the retailer launched “a number of independent investigations into certain matters”.
Under the interim team of Helen Ashton and Kath Smith, Acting Chairman and CEO, the company announced £ 654.7 million before tax this morning (or £ 947 million before tax and exceptional items).
Cowgill got the boot almost a month ago, so today’s finances may not cover some of the latest declines in JD’s speed, however, the interim management team is keeping the previous guidelines for 2022.
JD said that he expects that the profit for the next financial year will be in line with the performance from 2021.
With the increase in shares in London, investors seem to be buying the company’s trust, although not everyone is convinced that current trading levels can be maintained.
“Uncertain economic outlook and cost of living crisis for consumers pose a difficult background,” which were not included in today’s results as they covered 12 months before the war in Ukraine, said Keith Bowman, an investment analyst at Interactive Investor.
“The loss of the group’s CEO and conflicts with the Competition and Market Role cannot be ignored, while Brexit and supply chain challenges have offered their obstacles.”
JD’s regulatory position could indeed be further examined in the coming weeks and months, as it noted that a “review of compliance issues” was under way after Cowgill’s departure, while the Evening Standard reported this afternoon that external advisers would conduct investigations and JD should relocate its management, risk and control environment.
Then, there’s the issue of permanent employment for the CEO and president, meanwhile, Cowgill discusses his severance pay. JD, on the other hand, is in a war box for acquisitions, according to stockbroker Peel Hunt.
One man band
Since the release of Cowgill nearly a month ago, JD shares have fallen and remained close to 10% lower even after today’s rise.
But, according to Peel Hunt, today’s numbers prove that “JD was not an independent band”.
“These numbers show his essential strength and the stock is now rejecting too much bad news; today’s numbers and guidelines should convince, ”the broker said in a note.
AJ Bell’s investment director Russ Mold, meanwhile, said JD’s new CEO would “inherit a strong fingerprint business in many matters”.
War chest for more acquisitions
JD’s financial year has been boosted by the conclusion of deals and it is recommended that this strategy be continued.
Last year, he bought DTLR, an American fashion store that opened JD to key consumers on the East Coast of America, which has been described as a very important impact on the ‘sneakers’ market in the United States.
Analysts at Peel Hunt believe that the acquisition of DTLR “achieves a healthy margin of 13%”, while Shoe Palace is even higher.
With a healthy cash balance of almost £ 1.2 billion, what follows for JD could depend on the appointment of a new CEO.
“I would say that at the moment, for any business that has good cash reserves, it’s a really opportunistic market to raise value business,” said Julie Palmer, a restructuring specialist at Begbies Traynor (AIM: BEG).
“Even if you have to look a little to the side of something that doesn’t necessarily fit a business model, like Schuh, for example.”
“For JD businesses that run well and don’t have too much debt and a decent amount of cash, there are many opportunities, especially considering that there may be jobs we haven’t been willing to sell in the past, but there will be at the moment.”
While there is still an element of uncertainty surrounding JD’s leadership, and analysts predict it could take between 12-18 months to fill the top spot, it is in a strong position to continue its global expansion and could find some surprising jobs. way.