JD Sports Fashion H1 profits fall, but H2 starts strongly
JD Sports Fashion has had big news to share recently with its new CEO and a deal struck to ease its former executive chairman’s exit. But on Thursday the really important release was its interim results. And the 26 weeks to 30 July were hugely profitable, even though the firm’s profits dropped.
The company recorded revenue of £4.418 billion (based on IFRS 16 figures), up from £3.885 billion. But operating profit dropped to £332.9 million from £396.8 million, and pre-tax profit was down to £298.3 million from £364.6 million.
However, the results were “at the top end of the board's expectations” and came as it saw a “continued robust performance in the sports fashion retail fascias in the UK and Republic of Ireland”. They delivered a profit before tax and exceptional items of £153 million, down from £174.2 million.
It also reported a return to profit in the sports fashion retail fascias in Europe, which contributed to a profit before tax and exceptional items from them of £57.1 million, much better than a loss of £7.2 million a year earlier.
A profit for the sports fashion retail fascias in North America of £130.4 million was down sharply from £245.5 million a year before, “with the performance in the period reflecting, as expected, the non-comparability of trading conditions in the United States as a result of the Federal fiscal stimulus in the prior year and the supply chain challenges of certain international brands which has led to reduced availability of key footwear styles, particularly in the first quarter”.
That said, total revenue growth in organic retail businesses was 5% “with this level of growth continuing in the second half to date including a return to growth in the United States”.
And that US bounce reflects the group’s wider international development that “continues to progress positively”.
It has 101 stores now trading as JD in the US with a flagship store in Chicago due to open in the second half; it has opened 51 net new JD stores across Europe, including a first store in Hungary and with the first store in Greece due to open shortly; four JD stores in Indonesia and two in Israel opened under JV arrangements in the period meaning that the core JD fascia now has a retail presence in 27 countries. And it made further progress in Australia with three new stores debuting in the period and a first store in Adelaide opened subsequently.
The company added that its Outdoor businesses saw another period of revenue growth with total revenues increasing by 16.8% compared to the prior year.
The board still believes that headline profit before tax and exceptional items for the year end 28 January 2023 will be in line with the record performance for the previous year. But it remains cautious about trading through the rest of the year as surging inflation dents consumer spending.
Non-exec Chair 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 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 group has faced numerous 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. [But] 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.”
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