Cost-of-living pressures weigh on profits at JD Sports

(Sharecast News) - JD Sports Fashion posted a slide in half-year earnings on Wednesday, as it warned that the tough conditions seen in the first half were set to continue.

The retailer posted a 0.7% decline in sales to £5.9bn in the 26 weeks to 1 August, with like-for-like sale down 2.8%. Operating profits were 20.5% lower at £294m, while pre-tax profits before adjusting items slid 19.7% to £282m.

In North America, its biggest region, like-for-like sales fell 4% to £2.2bn, while in the UK, they eased 1.4% to £1.4bn. Only the smaller Asia Pacific market reported like-for-like growth, with a 3% uplift to £278m.

Chief executive Regis Schultz called it a "resilient" performance amid a challenging backdrop, including cost-of-living pressures, footwear product cycle headwinds and widespread promotional activity.

He continued: "We achieved several strategic milestones in the period. We continued to broaden our product proposition, with apparel and accessories growing to 36% of group sales, alongside strong momentum in performance-based running and new footwear styles."

But the blue chip acknowledged that headwinds were likely to persist into the second half, including a weaker spending environment in its core customer demographic, ongoing product cycle evolution in footwear and promotional activity. JD Sports reiterated its recently reduced guidance, for pre-tax profits before adjusting items of between £700m and £800m. The chain had previously been expecting annual profits in the range of £750m to £850m.

Schultz said: "While the trading environment remains tough, I am encouraged by the progress we are making and confident in our strategic execution."

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