Bosses at retail giant JD Sports have warned over future inflation and supply chain disruption hitting its trade over the rest of the year as it reported a fall in its pre-tax profits of over £50m.
The Greater Manchester-headquartered group has reported profits before tax and exceptional items of £383.5m for the six months to July 30, 2022, down from the £439.5m it posted during the same period in 2021.
However, its revenue increased from £3.8bn to £4.4bn over the same time.
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JD said the results are at the top end of its expectations, with the reduction on last year's profits partially driven by supply chain disruption affecting international brands and dragging down stock of its key footwear styles.
Bosses warned that widespread economic uncertainty, inflationary pressures and industrial action leading to further challenges in supply chains could affect its trading in the second half of the year, although the group has not altered its full-year profit outlook.
During the period, a net of 51 JD stores opened across Europe including a first location in Hungary. A total of 101 stores are not trading as JD in the US, with a flagship shop in Chicago due to open in the coming months.
The group was also forced to sell Footasylum to a German company for almost £40m because of competition concerns.
The half-year results come after JD Sports announced it had agreed a £5.5m exit deal with its former boss, Peter Cowgill.
JD Sports has also revealed that it has acquired 50% of the shares in its existing subsidiary, JD Sports Fashion Korea Inc, for £16.4m. It now owns 100% of the share capital of JD Korea.
Non-executive chairman Andrew Higginson said: "Whilst 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 a profit before tax and exceptional items in the first half of £383.5m (2021: £439.5m).
"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.
"The progress that the group is making in its global markets is reflected by the fact that total sales in the group's organic retail businesses were 5% ahead of the prior year.
"This performance is very encouraging, as notwithstanding the non-comparability of trading conditions in the United States, the group has also faced numerous other challenges in the period including the well-publicised shortage of supply from a number of the international brands and the challenging global macro-economic situation.
"JD continues to be the partner of choice for many international brands who see our premium fascias as the natural home for their latest ranges and freshest new styles. Our relationship with these brands and our access to product is as strong as it ever has been.
"We are delighted to welcome Régis Schultz to the group as chief executive officer. Régis has now commenced in the role with his induction into the group, including introductions with key business leads and international brand partners, at an advanced stage.
"We firmly believe that Régis has the right characteristics and experience to lead the group on the next phase of its journey.
"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.
"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 28 January 2023 will be in line with the record performance for the year ended 29 January 2022."
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