JD Sports warned that it remained “cautious” about trading in the coming months as soaring inflation and worker strikes threatened to dampen consumer spending and disrupt its supply chain.
The sports retailer said that while sales over the past six weeks were up 8% from a year earlier, it was aware that price increases related to rising energy costs could hit its revenue as shoppers spend less.
The group said it was also taking “necessary actions” to offset its own costs, including improving the energy efficiency of all its factories.
“Given widespread macroeconomic uncertainty, inflationary pressures and the possibility that industrial action could further disrupt supply chains, which are ongoing risks in many markets, we inevitably remain cautious about transactions for the remainder of the second half,” JD Sports said.
However, the company said it still expects full-year pretax profit before special costs to be in line with its record annual results reported in January.
The retailer reported a 19% drop in pre-tax profit to £298m for the six months to July, partly due to the US government’s support last year as part of the country’s Covid stimulus package, which boosted comparable earnings .
Its chairman, Andrew Higginson, welcomed the 5% increase in global retail sales over the period, saying the figure was encouraging amid supply shortages and challenging economic conditions.
“This year is expected to follow a more normalized trading pattern, a result at the top end of our first-half expectations, demonstrating the continued resilience of our global proposition and the strength of our consumer engagement,” he said.
He added that while this was a “transition period” for the board, “it is reassuring that this has not impacted the financial performance of the group, which continues to deliver strong results”.
His comments refer to the resignation of former boss Peter Cowgill in May. The 69-year-old stepped down after the competition watchdog fined JD.com more than £4m over a secret meeting with the boss of takeover target Foot Asylum, including a video shot in a car park near Bury, Greater Manchester.
JD.com confirmed on Wednesday it had struck a deal to pay Cowgill a “golden farewell” of £5.5m over three years, in addition to a one-year salary worth more than £906,000 and a potential bonus worth up to £450,000, as part of a bid to prevent him from building Deals with rival retailers.