JD Sports posts record profits but warns of cost of living impact
The global retailer of sports, fashion and outdoor brands () posted an annual profit that more than doubled for the 12 months ended 29 January 2022 but warned investors that near-term earnings could be flat amid the cost-of-living crisis.
JD Sports saw underlying pre-tax profits more than double from £421.3m - the previous record set in the year before Covid struck - while statutory pre-tax profits jumped to £654.7m from £324m as demand for its so-called 'athleisure' wear remained strong in its home market and in North America, where it's been on an acquisition spree since buying Finish Line for $558m in 2018.
“This result demonstrates our capacity for growth in both existing and new markets, and the strength of our global proposition and consumer engagement in store and online,” it said.
Alongside a strong performance from its Sports Fashion fascias, its outdoor division returned to profitability amid “greater demand for holidays in the UK and a general recognition of the physical and mental health benefits of spending time outdoors”
“It is increasingly evident that the group's progress in North America, and the United States in particular, is having a long-term positive impact both on the group's overall performance and its relationships with the international brands,” said JD's Interim Chairman, Helen Ashton.
On the back foot
Yet despite posting record profits for the year, the company warned investors that profit growth is expected to be held back in the year to January 2023, due to pressures of the UK’s current cost-of-living crisis as well as "the general global macro-economic and geopolitical situation."
Governance issues have also dogged the group, whose shares had lost nearly half of their value in the six months before today's update, which included details of plans to improve standards. In recent weeks, the British sportswear retailer has been a subject of several investigations by Britain's antitrust watchdog which resulted in the resignation of long-term boss Peter Cowgill.
JD Sports was fined £4.3m in February 2022 by the Competition and Markets Authority (CMA) for exchanging information with Footasylum, which it had agreed to buy at the time for £90m. The watchdog ruled that JD would have to sell the business, with the search for a buyer ongoing.
Looking ahead, the group said it continues to expand its global reach strategically through both the opening of new stores - including the opening of the first stores in Poland and Romania - and acquisitions, such as the acquisition of DTLR, a fashion retailer on the East Coast of the US.
The company said it is also undertaking work to “enhance the logistics network and fulfilment capabilities across the UK and Western Europe,” with work ongoing in Derby, Dublin and Heerlen in The Netherlands. The company added that it has repaid the £24.4 million support which its UK businesses received during the year to January 29 from the furlough scheme.
In recent weeks, JD Sports Fashion has received an average rating of ‘Buy’ from analysts. The Company now remains in the process of filling the two positions of CEO and Chairman.
Shares in JD Sports Fashion were trading 4.21% higher at 111.47p following the update.
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