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JD Sports profits dip but ‘optimistic’ despite economic headwinds

·3-min read
JD Sports advertises its stores on the world famous Leicester Square outdoor site   (JD Sports)
JD Sports advertises its stores on the world famous Leicester Square outdoor site (JD Sports)

High Street fashion retailer JD Sports said it was “optimistic” about its future trading performance but that it is not “immune” to the wider economic challenges facing the business or its consumers.

The comments came as the company reported a 19% drop in pre-tax profits to £298 million, for the six months to July, as it was buffeted by the decline in sales after a financial stimulus package in the US boosted consumer spend last year leading to increased sales.

The retailer flagged a “robust performance” in the UK and Ireland where it recorded a pre-tax profit of £153 million down on  £174.2 million for the same period last year, and said it had reached “expectations” for the regions, but that the clement summer weather had impacted sales at its retail brands Blacks and Go Outdoors.

However, it said that the return of children to school this month had boosted revenues.

Andrew Higginson, chairman of JD, said that the company was in a good position for growth despite the economic gloom, due to its young customer demographic and low unemployment that had put money into the pockets of its target shoppers.

He told The Standard that unless a “major recession” presented itself he was “reasonably optimistic” for the coming months despite headwinds buffeting the global economy.

“The UK has bounced back in September, we’ve had a good back to school period. At the moment, although we’re not immune to what is going on in the world, we’re reasonably optimistic as we sit here today,” he said.

New boss Régis Schultz, who has been in the hot seat at JD for only a matter of weeks, said that he was pleased to be joining the business, but was looking at expansion in territories outside the UK as a priority stating that the firm had “double digit share in only three countries in the world, which is the UK, Australia and Ireland”.

He added that in the rest of the world JD was “lower on single digits, so there is a lot to achieve in markets such as the US that is the biggest market, by far, in the world”.

Yesterday (Wednesday), the high street retailer came to a financial agreement with former boss, self-styled “king of trainers”, and veteran retailer Peter Cowgill that reports said could be worth anything up to £7 million.

Higginson said: “It’s always worth reminding people that these things are a team effort. Peter was a very charismatic and a larger than life figure, but the team around him were the ones delivering day in and day out and have continued to do that.

“The news yesterday was really to make sure that we did things properly with Peter. He made an extraordinary contribution to the business over his 18-years plus and it didn’t end in the way any of us wanted it to back in May, so it was nice to be able to go back and resolve that, and have Peter available to Régis and myself in terms of consulting.”

Julie Palmer, partner at Begbies Traynor, said: “JD Sports has shrugged off boardroom battles to deliver a solid performance in a very testing time.“Although the warm weather slowed sales as UK consumers kept their summer wardrobes for longer, JD’s biggest trading periods are still to come.

“Like so many other consumer businesses, JD is being cautious. It warned that macro-economic uncertainty, inflationary pressures, fresh supply chain troubles and the risk of strikes all remain hurdles.

“With JD’s worldwide presence, how the company performs over the coming months could be one of the clearest indicators of just how worried consumers are about their financial futures.”