By Kristy Dorsey

JD Sports pulled a Christmas cracker as consumers “readily” switched between high street and online shopping during the festive trading period, leading to a sharp hike in its profit forecast for the full financial year.

The FTSE 100 sportswear chain reported robust demand throughout the second half of the year, including the key months of November and December. Total revenues for the 22 weeks to January 2 were more than 5 per cent higher on a like-for-like basis.

As a result, the company anticipates underlying pre-tax profits of “at least” £400 million for the year to January 30, far ahead of previous market expectations in the region of £295m.

With stores in its main UK market likely to remain closed until Easter or beyond, and closures in other countries possible “at any time”, JD Sports remained cautious on the outlook for the next financial year ending January 2022. Though directors would be “confident” of a strong improvement under normal circumstances, its current best estimate is that profit before tax will be between 5% and 10% higher, indicating a range of £420m to £440m.

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“Looking ahead, it is clear that operational restrictions from the Covid-19 pandemic will also be a material factor through at least the first quarter of the year to 29 January 2022,” the company said in its trading update.

“Whilst we are confident that we have the proposition to continue to attract consumers throughout this period, the process to scale down activity in stores and scale up the digital channels, often at extremely short notice, presents significant challenges.”

Even so, shares in JD Sports closed nearly 4% higher yesterday at 883.2p as investors welcomed what analysts at Shore Capital described as a “stellar performance” amid lockdown restrictions.

“In our view, JD Sports remains a best in class retailer, amongst our universe of general retailers,” Shore said in a note to investors. “The company is tightly managed with excellent cash generation with tight stock and cost controls.”

READ MORE: 12,000 Debenhams jobs at risk as JD Sports pulls out of rescue talks

Analysts also noted with approval the company’s decision at the beginning of December to pull out of talks over a rescue deal for the Debenham department store chain after one of its major suppliers, Arcadia, also fell into administration. It instead bough a bolt-on acquisition in the US called Shoe Palace, which Shore said is “both earnings accreditive and gives the company new geographical territories in the important US market”.

Millions were wiped off the value of JD Sports immediately after it emerged that it was considering buying Debenhams. The shares have since recovered those losses along with those sustained during the original sell-off triggered by the UK’s first lockdown last year.

Analysts at AJ Bell said the latest trading update from the company “does not read like there is a global pandemic going on”.

“It grew like-for-like sales materially in the period encompassing Christmas,” AJ Bell said. “To guide for profit ahead of expectations despite the massive disruption resulting from Covid is a mammoth achievement.

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“It also demonstrates the fact that retail spending itself has held up reasonably well despite the crisis – it’s just that sales have shifted from physical stores to the internet.”

One short-term concern is that the chain’s youthful customer base will be particularly exposed to the mounting unemployment crisis in the UK, as younger people are more likely to work in hospitality, retail or similar industries that have been hit particularly hard by job losses.

Peter Cowgill, executive chairman of JD Sports, said younger customers were likely to face some pressure on employment and income. However, he also noted that they are “more fearless than older shoppers in a Covid-19 environment”.

The group, which also owns the Tiso chain of outdoor clothing and equipment stores, is due to publish its full-year results on April 13.