JD Sports cautious on trading after profit slip

// Revenues have risen, but pre-tax profits have fallen at JD Sports
// The board has maintained and said that pre-tax profit will be in line with the record performance for the year ended 29 January 2022

JD Sports said it will continue to be “cautious” about trading after reporting a drop in first-half profits, as inflationary pressures continue and the threat of strike action in its supply chain looms.

The UK’s biggest sportswear retailer reaffirmed its annual profit outlook as revenues for the six months to July 3 rose to £4.418bn, up from £3.885bn the previous year but pre-tax profits fell to £298.3m, down from £364.6m in 2021.

The retailer said it believes the fall in profits is due to the unseasonal weather through the summer in the activity-based sector and said it was not a true reflection of the substantial progress it is making.

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Its sales in the UK initially softened in August and early September as customers were slow to take up heavier autumn products as the weather remained relatively warm following heatwaves in previous months.

The business has also returned to paying an interim dividend, following two years of withholding a payout to shareholders. It also expects to match last year’s record year in its annual results.

JD Sports non-executive chair, Andrew Higginson, said: “While this has been a period of transition for the board, it is reassuring that this has not impacted the financial performance of the group which continues to deliver strong results. With this year expected to follow a more normalized trading pattern, this result is at the top end of our expectations for the first half demonstrating the ongoing resilience of our global proposition and the strength of our consumer engagement.

“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.

“While 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 recognized that the most material trading periods lie ahead.

“Given the widespread macro-economic uncertainty, inflationary pressures and the potential for further disruption to the supply chain with industrial action a continuing risk in many markets, it is inevitable that we remain cautious about trading through the remainder of the second half.

“Despite this, the board maintains its view, at this point, that the headline profit before tax and exceptional items for the year ending January 28, 2023 will be in line with the record performance for the year ending January 29, 2022.”

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