JD remains ‘cautious’ on trading as H1 profits slip
Revenues grew 13% year-on-year to £4.4bn due to a ‘continued robust performance’ in the UK and Republic of Ireland, and increased profitability in Europe and the US
JD Sports has reported its pre-tax profits and exceptional items dropped 12% year-on-year in the 26 weeks ended 30 July 2022 (H1 FY22) from £439.5m to £383.5m, following macroeconomic uncertainty, inflationary pressures and the potential for further disruption to the supply chain.
The group said it remains cautious about trading through the remainder of H2 and that this year is expected to follow a more normalised trading pattern, although the H1 results are at the top end of JD’s expectations.
Operating profits dropped from £396.8m to £332.9 in the period, with North America in particular seeing a reduction in profit from £245.5m to £130.4m. This is due to the lack of fiscal stimulus and the shortage of supply from some “major” international brands.
However, revenues grew 13% year-on-year from £3.8bn to £4.4bn due to a “continued robust performance” in the UK and Republic of Ireland, and increased profitability in Europe and the US.
Sports fashion retail fascias in Europe returned to profit, contributing to pre-tax profits and exceptional items of £57.1m for H1, compared to a loss of £7.2m in H1 FY21.
JD Sports said it believes this reduction in profit is due to the unseasonal weather through the summer and isn’t a true reflection of the progress the group is making in this sector.
Looking ahead, the board maintains its view that the pre-tax profits and exceptional items for the year end 28 January 2023 will be in line with the “record” performance for the year ended 29 January 2022.
The news comes as JD Sports announced yesterday (21 September) that it has reached an agreement with former chairman Peter Cowgill, which will see him receive £5.5m in an exit deal that will put him in a consultant position for the group following his departure last May.
Andrew Higginson, non-executive chair, said: “We continue to be reassured by the ongoing resilience in the group’s performance with trade to date through the second half following a similar trend to the first half with total sales in the group’s organic retail businesses tracking around 8% ahead of the prior year after six weeks.
“Whilst the overall performance continues to be encouraging and the result for the half year was at the upper end of the board’s expectations, it must also be recognised that the most material trading periods lie ahead.”
