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JD Sports shares spike, but will dividend dispute derail progress?

The JD Sports share price spiked on Wednesday following a trading update. Although footfall remains ‘fragile’, the retailer reported ‘elevated’ online sales, but could a dispute over dividends stop the bull run in its tracks?

  • JD Sports shares rise 1.3% overnight.
  • Trading update confirms full year profits will be no less than £550 million.
  • Will a dividend dispute stop the recent upswing for shares in JD Sports?
  • Ready to trade the JD Sports share price? Open an account today

JD Sports shares opened at £9.29 on 1 July, 1% higher than the previous day’s opening price. The jump from £9.19 to £9.29 began in the final hours of trading. With reports emerging that full-year profit was set to reach £550 million, interest in the JD Sports share price increased. This momentum continued in the early hours of trading on 1 July as shares rose to £9.59. This recent surge has taken the JD Sports share price to a one-month high.

What might have caused the JD Sports share price spike?

The recent rush of activity looks to have been fuelled by a 1 July trading report. Executive chairman Peter Cowgill confirmed that business in North America, Asia, and Central Europe has returned to some level of normality. He also reported that customers in Europe have ‘reacted positively’ to JD’s new product mix coming out of lockdown. As such, sales retention has been ‘slightly ahead’ of last year’s figures. Finally, in the UK, activity has been similar with online sales driving the latest projection that group revenue will be no less than £550 million for the fiscal year.

JD Sports also announced its intention this week to buy an 80% stake in Spanish online sports retailer Deporvillage. The deal will increase the company’s online presence in Spain, particularly with regard to sports equipment for running, outdoor activities, and cycling. Executive chairman Cowgill also said the acquisition would fuel ‘further significant progress in our international development’ for JD Sports. This could be yet another positive for the company. However, there may be some turbulence ahead if a dispute over furlough payments isn’t resolved.

How much support did JD Sports receive?

The retailer received £61 million in Covid-19 furlough payments, as well as business rates relief totalling £38 million. JD Sports also picked up £25 million in wage support outside of the UK. The latest full year projection has promoted calls for JD to repay the furlough money it received. The pushback has come from advisory groups Glass Lewis and Institutional Shareholder Services (ISS) following news that dividends worth £16.7 million are set to be paid to shareholders. Cowgill is set to receive £4.3 million for work that he claims took place before the pandemic.

The ISS is urging shareholders to vote against the remuneration policy on 1 July. Cowgill confirmed in JD's trading report that he will consider paying back furlough money. However, it remains a point of contention that could disrupt the JD Sports share price in the coming weeks. Overall, the general picture is positive with revenue increasing and retail returning to some semblance of normality. But, with monetary debates potentially upsetting the positive run, we could see JD Sports shares level out or take a turn as we move through July.

Will JD Sports shares continue to spike?

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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