Google profit

JD Sports profit tumbles amid rising inflation, supply chain issues

JD Sports’ pre-tax profits were £298.3m in the period, down 18% from £364.6m the previous year. Photo: Press Association

J.D. Sports (JD.L) saw its shares fall more than 4% in London after reporting a drop in first-half profits.

The sports retailer blamed rising inflation and supply chain issues affecting international brands, which led to lower sneaker stock.

Although the results topped its expectations, pre-tax profits were £298.3m ($337.8m) in the period, down 18% from £364m. £.6 million the previous year.

Revenue hit £4.4bn in the first half, from £3.9bn a year ago, on strong summer sales, but profits in North America nearly halved.

This was due to the temporary fiscal stimulus in the United States last year, which boosted sales more than usual.

JD further warned that widespread economic uncertainty, inflationary pressures and industrial action could cause additional problems and hurt trade in the second half of the year.

However, the group did not change its outlook for the full year.

“While the overall performance continues to be encouraging and the half-year result is at the upper end of the board’s expectations, it must also be recognized that the most important trading periods are ahead,” said Andrew Higginson, Non-Executive Chairman. .

“Given widespread macro-economic uncertainty, inflationary pressures and the potential for further supply chain disruptions with industrial action, a lingering risk in many markets, it is inevitable that we remain cautious about trading. for the rest of the second half.”

Read more: Amazon, Google and Microsoft face investigation by UK cloud regulator

It comes just a day after the company announced it would pay £5.5million to former boss Peter Cowgill, who resigned following a corporate governance scandal.

JD Sports has been fined £4.3million by the Competition and Markets Authority (CMA) for sharing commercially sensitive information with Footasylum, the rival it was trying to acquire ‘era.

He then suffered a £50million loss on the sale of Footasylum after being ordered by the watchdog to offload the business.

Higginson said Thursday that while there was a “transition period” for the board, it hadn’t impacted the company’s financial performance.

Cowgill will take home £3.5million over two years in an exit deal that bars him from taking on a new role at a competing business or advising similar brands.

He will also receive a £2m salary for providing support and knowledge to the new chief executive, former B&Q chief executive Regis Schultz, and the chairman of JD, over an agreed three-year consultancy period. .

Read more: Interest rates: how the BoE rate hike will affect mortgages and property prices

AJ Bell Chief Investment Officer Russ Mold said: “Life could get a lot tougher for JD Sports given the significant headwinds facing retailers.

“With interest rates expected to continue to rise for the foreseeable future and consumers beginning to feel less confident about job security given the dark clouds over the economy, JD will needing highly desirable products on its shelves or its second half results won’t be a patch on the first half.

“A reduction in consumer spending combined with the possibility of further supply chain disruptions could be an unpleasant cocktail, which could give Régis Schultz some serious challenges in his first months as new chief executive.”

Watch: How does inflation affect interest rates?