JD Sports Fashion PLC (LON:JD.) has issued a statement ahead of its AGM on Thursday afternoon covering some points that have concerned investors.
The FTSE 100 group guided for £550mln profit before tax for the full year, however it is still considering whether to repay taxpayer money back to the government.
READ: JD Sports heads for heated AGM as investors protest £4.3mln executive bonus
During the pandemic, it accessed £61mln through the furlough scheme and an estimated £38mln as part of the business rates relief, alongside a further £25mln in wage support outside the UK.
The athleisure retailer justified the decision saying: “We must also acknowledge that the uncertainty surrounding COVID has not yet fully passed and the current resurgence in infection rates is affecting our core customer demographic more than was the case previously”.
The firm, which operates 3,300 stores across 29 countries plus an e-commerce platform, said trading in the immediate period after reopening was particularly encouraging in the UK, although store footfall remains “fragile” with high online traffic.
In the US, the fiscal stimulus granted to individuals during the Spring boosted demand for its products, it noted.
In terms of governance, JD Sports said it will split the current role of executive chairman and chief executive, held by Peter Cowgill, after some investors noted it is considered best practice in the UK to keep the roles separate to avoid one person having too much decision-making power.
It also acknowledged the need to diversify its board, made of seven white people, two of which are women.
“The board… have invited the independent non-executive directors to commence the selection process and make recommendations to the Nominations Committee.”
Advisory groups Glass Lewis and Institutional Shareholder Services (ISS) previously recommended investors to vote against the remuneration policy at Thursday’s meeting, as the £4.3mln bonus to Cowgill was deemed inappropriate considering the use of government help.
ISS is also pushing against the re-election of the executive chairman, given that his ongoing dual role of chief executive and board chair continues to go against the UK corporate governance code.
And as chair of the nomination committee, it also said Cowgill should be held responsible for JD missing the Hampton-Alexander target of at least 33% of board members being women.
The fact that the company hasn’t repaid back the furlough money is “disgraceful”, according to says AJ Bell’s investment director Russ Mould, and it’s “even more of an insult that it is still biding its time to make a firm decision or not”.
“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,” he said.
“Therefore, it should really use money from online operations to support disruption to its store estate, not rely on Government hand-me-downs. Shareholders should be pushing for the company to pull up its socks and give that money back.”
Shares rose 3% to 945.6p on Thursday at noon.