JD Sports calls for ‘rental realism’ as coronavirus impacts footfall
JD Sports this morning warned landlords that it will seek “rental realism”, including greater flexibility in property leases, due to a reduction in footfall during the UK coronavirus pandemic.
The retailer said it is “inevitable” that it will require more flexibility in order to maintain a large physical store estate in the UK and Ireland.
“We have always believed that the retail estate for JD in the UK and Republic of Ireland provides positive benefits in terms of brand awareness, the customer’s desire to see, handle and try the product, and our ability to provide convenience through multiple delivery points,” JD Sports said this morning.
“However, given the clear uncertainty on future levels of footfall, particularly if social distancing remains an ongoing requirement, it is inevitable that maintaining a large nationwide physical retail presence will require greater flexibility in property leases.”
JD Sports, which has reopened most of its stores following coronavirus lockdowns around the world, said that footfall has been weaker in malls and shopping centres, particularly in Northern Europe at weekends, as customers are “nervous” about the risks of being in enclosed spaces.
The reduction in footfall has been partially offset by strong conversion, as consumers are less inclined to browse and more likely to make a purchase.
JD Sports has abandoned its target of opening one store on average per week across Europe due to the impact of the pandemic. However, it is still planning to open a flagship store in Paris over the next few months.
Executive chairman Peter Cowgill said: “We were encouraged by the continued positive trading in the early weeks of the year prior to the emergence of Covid-19 and we firmly believe that we are well placed to regain our previous momentum.
“Looking longer term, there is inevitably considerable uncertainty as to what the effect of Covid-19 will be on consumer behaviour and footfall with future store investments highly dependent on rental realism and lease flexibility.
“Ultimately, however, we remain confident that we have a market leading multi-channel proposition which has the necessary flexibility and agility to prosper within a retail environment that may see profound and permanent structural change.”
JD Sports also reported that revenue in the year ended 1 February was up 30 per cent to £6.1bn, with profit before tax up three per cent to £348.5m.