JD Sports has warned it remains “cautious” about the trade in the coming months as rising inflation and labor strikes threaten to curb consumer spending and disrupt its supply chain.
The retailer said that while sales over the past six weeks were 8% higher than a year earlier, it was aware that rising prices linked to a jump in energy costs could weigh on its bottom line as customers cut back on their spending.
The group said it was also taking “necessary measures” to recoup its costs, including improving energy efficiency at all its sites.
“Given widespread macroeconomic uncertainty, inflationary pressures and the potential for further supply chain disruption with industrial action a continuing risk in many markets, it is inevitable that we remain cautious on trading for the rest of the second half,” JD Sports said.
However, it said it still expects full-year pre-tax profit, before exceptional charges, to be in line with the record annual performance it reported in January.
The retailer reported a 19 per cent drop in pre-tax profits to £298m in the six months to July, partly due to the US government support it received as part of the Covid stimulus package last year, which boosted comparable earnings.
Its chairman, Andrew Higginson, welcomed the 5% growth in global retail sales in the period, saying the figure was encouraging amid tight supply and challenging economic conditions.
“With this year expected to follow a more normalized trading pattern, this result tops our expectations for the first half, demonstrating the continued resilience of our global offering and the strength of our consumer engagement,” he said.
He added that while it was a “period of transition” for the board, he “assures that this has not affected the financial performance of the group which continues to deliver strong results”.
His comments relate to the resignation of former boss Peter Cowgill in May. The 69-year-old resigned after the competition regulator fined JD more than £4m for holding secret meetings with the boss of its takeover target FootAsylum, including one that was caught on video in a car park near Bury in Great Britain. Manchester.
JD confirmed on Wednesday that it had agreed to pay Cowgill a “golden farewell” of £5.5m over three years, on top of an annual salary worth more than £906,000 and a potential bonus worth up to £450,000, as part of a deal to prevent him from setting up a rival merchant.