Sportswear giant JD Sports has announced a slump in its pre-tax profits by more than £50m as bosses cautioned over inflation and supply chain disruption affecting trading over the rest of the year. Its comes days after the Bury-headquartered group handed a former executive chairman Peter Cowgill a £5.5m exit deal after he resigned in May.
The retailer posted pre-tax profits of £383.5m for the first half of the year, a drop from £439.5m a year ago. JD Sport 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.
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Despite worsening economic conditions, consumers are “reluctant to give up the things most important to them”, the company said, adding that demand remains resilient. This is reflected in the company’s revenue which grew to £4.4bn in the first half of the year, up from £3.9bn a year ago. Sales were particularly strong in the summer as a result of more people going on international holidays, although trade slowed in August and early September as shoppers held back on buying clothes for the autumn season while the weather stayed warm, JD said.
JD Sports non-executive chair Andrew Higginson said: “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.
Mr Higginson also pointed out that although there has been a “period of transition” for the board, it has not impacted the group’s financial performance. Mr Cowgill resigned in May after the retailer was fined £4.3m by the UK’s competition watchdog for sharing commercially-sensitive information with Footasylum, the rival it was seeking to buy.
The group, which is listed on the London Stock Exchange, said Mr Cowgill has been paid his salary, contractual benefits and will be eligible for any appropriate annual bonus, subject to usual performance conditions, for the period up to May 25, 2022. The terms of the deal will see Mr Cowgill be paid £3.5m over two years for agreeing to certain limits and £2m over three years to act as a consultant.
Mr Higginson has since stepped in as non-executive chair and JD appointed its new chief executive, Regis Schultz, in August.
Mr Higginson said: “Regis 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 Regis has the right characteristics and experience to lead the group on the next phase of its journey."
Shares in JD Sports were down around 3 per cent on Thursday morning.
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