March 31, 2023

JD Sports has warned that it remains “cautious” about trading in the coming months, as rising inflation and worker strikes threaten to curb consumer spending and disrupt its supply chain.

The sports retailer said that although sales in the last six weeks were 8% higher than a year earlier, it was aware that rising prices linked to rising energy costs could affect its earnings as shoppers cut back on their spending.

The group said it was taking “necessary steps” to offset its own costs, including improving energy efficiency at all its sites.

“Given broader macroeconomic uncertainty, inflationary pressures and the potential for further supply chain disruptions with industrial action in many markets, it is inevitable that we remain cautious on trading for the remainder of the second half,” JD Sports said.

However, it said it still expects full-year pre-tax profit, before exceptional costs, to be in line with the record annual performance it reported in January.

The retailer reported a 19% drop in pre-tax profits to £298m for the six months to July, partly due to US government support it received as part of the country’s Covid stimulus package last year, which boosted comparable earnings.

Its chair, Andrew Higginson, welcomed the 5% increase in global retail sales in the period, saying the figure was encouraging amid supply shortages and challenging economic conditions.

“This result is above our expectations for the first half, which is expected to follow a more normal trading pattern this year, demonstrating the ongoing resilience of our global offering and the strength of our consumer engagement,” he said.

He added that it was a “time of transition” for the board, “reassuring that it has not affected the group’s financial performance which delivered strong results”.

His comments refer to the resignation of former boss Peter Cowgill in May. The 69-year-old quit after the competition regulator fined JD more than £4m for holding secret meetings with the boss of his takeover target FootAsylum, including being caught on video in a car park near Bury, Greater Manchester.

JD confirmed on Wednesday it had struck a deal to pay Cowgill a “golden send-off” of £5.5m over three years, as part of a one-year salary of more than £906,000 and a potential bonus of up to £450,000 to prevent him from setting up a rival retailer. contract

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