It has been an eventful few weeks for JD Sports Fashion (LON: JD) (JD). The company share price has risen by 3.85% in the past month.
Last week the sports retailer faced a shareholder revolt after it emerged boss Peter Cowgill was paid in the region of £6m in bonuses despite the company claiming more than £100m in government support.
Investors were outraged after the company said it was yet to decide whether it will repay furlough cash paid out by the government despite raising its profit guidance to £550m.
“The fact [JD] still hasn’t repaid furlough support from the government despite guiding for at least £550m in profit this year is disgraceful. It’s even more of an insult that it is still biding its time to make a firm decision or not whether to give back the money,” said Russ Mould, investment director at AJ Bell.
“This is an incredibly successful business which is making significant amounts of money. The furlough scheme was put in place to support companies during dark times, but JD Sports is one of many businesses which have thrived with online sales during the pandemic,” Mould added.
Post lockdown reopening of stores and online sales allowed JD Sports to raise its profit outlook to no less than £500m. Up £324m from the previous year.
The firm said it will wait to make a decision on repaying the government support it received until there is certainty and clarity over the full easing of Covid-19 lockdown restrictions.
Peter Cowgill rejected criticism over the sum received, insisting that the lion’s share of the bonus was for work done before January 2019.
He told the BBC that the pay boost in 2020 is part of a long-term incentive share plan, adding that he had only received one payout from the scheme in the past eight years.
Cowgill also highlighted that JD profits had gone from £82m to £420m over the same period.
The JD acquisition spree continues
Spanish online-only sports retailer Deporvillage was acquired by JD Sports for a majority stake worth around £120m (€140.4m) last month.
Launched in 2010, Deporvillage has expanded internationally and now operates in several European countries, including Italy, France, Portugal, Germany and the UK.
JD Sports said €40.4 million of the €140.4 million acquisition price had been deferred pending Deporvillage performance results this year.
What next for the JD share price
The JD Sports share price has risen over 50% in the past year. It has outperformed FTSE 100 index, which has gained 15% during the same period, and the share price is currently at an all-time high, but can the share price continue to rise?
It is clear to see that JD Sports has seen some impressive returns over the past five years. Still, it remains to be seen if the sports giant can hold on to those gains while brands such as Nike, Adidas and Puma continue to target customers directly to benefit from higher margins.
At the time of writing, the JD Sports Fashion share price closed at 979.95p.
Not Investment Advice
Note: Views expressed are those of the writer. The author does not own any stocks mentioned. The article is information, not advice. Share prices can rise and fall. Past returns are not a guide to the future. Please do your own research.