JD Sports has warned it remains “cautious” about trading over the coming months as surging inflation and worker strikes threaten to curb consumers’ spending power and disrupt its supply chain.
The sports retailer said that although sales over the past six weeks were 8% higher than a year earlier, it was aware that rising prices linked to a jump in energy costs could impact its earnings as shoppers cut spending.
The group said it was also taking “necessary action” to offset its own costs, including by improving energy efficiency atall of its sites.
“Given the widespread macroeconomic 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,” JD Sports said.
However, it said it still expected full-year pre-tax profits, before exceptional costs, to be in line with the record annual performance it reported in January.
The retailer reported a 19% drop in pre-tax profits to £298m for the six months to July, partly due to the US government support it received as part of the country’s Covid stimulus package last year, which boosted comparable earnings.
Its chair, Andrew Higginson, welcomed a 5% rise in global retail sales over the period, saying the figure was encouraging amid supply shortages and challenging economic conditions.
“With this year expected to follow a more normalised 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,” he said.
He added that while it was 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”.
His comments refer to the resignation of the former boss Peter Cowgill in May. The 69-year-old stepped down after the competition regulator fined JD more than £4m for holding clandestine meetings with the boss of its takeover target FootAsylum, including one caught on video in a car park near Bury in Greater Manchester.
JD confirmed on Wednesday that it had struck a deal to pay Cowgill a “golden goodbye” of £5.5m over three years, on top of a year’s salary worth more than £906,000 and a potential bonus worth up to £450,000, as part of a deal to prevent him from setting up a rival retailer.
