JD Sports’ profits are being hit by logistics issues and rising costs as the sportswear giant adopts a cautious tone in the coming months
- Revenue in the North American division fell by almost half to £130.4m
- The Bury-based company benefited from America’s $1.9 trillion bailout last year
- UK clothing sales have fallen in recent months amid pressure on the cost of living
JD Sports reported weaker half-year results as the group suffered from supply chain challenges and rising costs.
After posting interim record pre-tax profits in 2021 on surging online demand, the sportswear retailer said total profits fell 18 per cent to £298.3m in the six months to July 30.
Revenue at its North American division fell by almost half to £130.4m from £245.5m, which the company attributed in part to logistics problems reducing the availability of certain styles of footwear.
Downturn: After posting record interim profits before tax in 2021, the sportswear retailer said total profit fell 18 per cent to £298.3m in the six months to July 30
JD Sports shares fell 5.4 per cent to 117.15 pence on Thursday morning, meaning their value is down around 46 per cent so far this year.
The company also struggled with strong comparatives after benefiting last year from the $1.9 trillion American Rescue Plan, which paid out more generous unemployment benefits and $1,400 each in direct payments to U.S. residents.
This offset the recovery of the European business from a loss and growing profitability in the Asia-Pacific region thanks to the absence of Covid-19 restrictions.
Meanwhile, profits in the British Isles fell 12 per cent to £153m, although sales continued to rise on the back of investments in a new Derby warehouse and a return to full business rates.
JD Sports has been criticized for failing to pay back tax breaks it received from the UK government despite massive increases in sales and profits, despite recently agreeing to pay back £24.4million in holiday earnings.
Total revenue rose 14 per cent year-on-year to £4.42 billion, with domestic trade benefiting from a rebound in foreign holidays and strong performances from its fashion brands including Tessuti and Mainline Menswear.
Since late July, JD Sports said sales at its organic retail stores were up year-on-year, although UK retail fell somewhat as warm weather discouraged consumers from buying autumn clothes.
During this time, clothing sales in the UK and many other countries have fallen as rising energy prices and other living costs have caused the global economy to slow.
JD non-executive chairman Andrew Higginson warned that his company is cautious on trade amid widespread macroeconomic uncertainty, inflationary pressures and the potential for further supply chain disruptions, with labor disputes posing an ongoing risk in many markets be.
Despite this, bosses expect headline profits before tax and special items for this financial year to match a record £654.7m in the previous 12 months.
Today’s results come just a day after JD Sports announced it will reward former longtime chief executive Peter Cowgill with a £6.4million “golden farewell”.
Cowgill resigned from his position in May following a series of controversies, including the UK Competition Authority’s fine of JD Sports for breaking rules during its disastrous acquisition of Footasylum.
