JD Sports profits knocked by logistics problems and rising costs
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JD Sports profits undermined by logistical issues and rising costs as the sportswear group adopts a cautious stance in the coming months
- Profits in the North American division fell by almost half to £130.4 million
- Bury-based company benefited from US $1.9 trillion bailout last year
- Clothing sales in the UK have fallen in recent months due to pressure on the cost of living
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JD Sports posted weaker half-year results as the group suffered from supply chain challenges and rising costs.
After making a record interim profit before tax in 2021 thanks to rising online demand, the sportswear retailer revealed that total profits have fallen 18 percent in the six months to 30 July to £298.3 million.
Profits in the North American division fell by almost half from £245.5 million to £130.4 million, partly blaming the company for logistical issues that reduced the availability of certain styles of footwear.
Downturn: Following a record interim pre-tax profit in 2021, the sportswear retailer revealed total profits have fallen 18 per cent in the six months to 30 July to £298.3m
JD Sports shares fell by midmorning Thursday by 5.4 percent to 117.15 pence, meaning their value has fallen about 46 percent so far this year.
The company also faced strong comparatives after benefiting the previous year from the US $1.9 trillion bailout, which distributed more generous unemployment benefits and outright payments worth $1,400 to US citizens.
This offset its European operations, which bounced off 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 £153 million, although sales continued to rise on the back of investment in a new warehouse in Derby and the return of full company rates.
JD Sports has been criticized for failing to repay the rate cut it received from the UK government, despite posting massive revenue and profit growth, though it recently agreed to repay £24.4m in leave earnings .
Total revenues grew 14 percent year-on-year to £4.42 billion, with domestic trade benefiting from the recovery of overseas holidays and strong performance from its fashion brands such as Tessuti and Mainline Menswear.
Since late July, JD Sports said sales in its organic retail business were higher than in the previous year, although UK trade slowed slightly as the warm weather left consumers unwilling to buy fall clothing.
During that time, clothing sales in Britain and many other countries have fallen as rising energy prices and other cost-of-living problems have slowed the global economy.
JD’s non-executive chairman Andrew Higginson warned that his company was holding back on trade “given widespread macroeconomic uncertainty, inflationary pressures and the potential for further supply chain disruption with industrial action an ongoing risk in many markets.”
Despite this, bosses expect total profit before tax and exceptional items for this fiscal year to be in line with the record £654.7 million in the past 12 months.
Today’s results come just one day after JD Sports announced it would award a £6.4 million ‘golden farewell’ to former former executive chairman Peter Cowgill.
Cowgill resigned from his post in May after a string of controversies, including the UK competition authority fined JD Sports for breaking the rules during the disastrous Footasylum takeover.