JD Sports Fashion reported a better-than-expected 2 percent rise in half-year profit and held annual guidance amid a “challenging and volatile market.” However, shares in the company fell as Nike – its major partner – posted a sharp drop in first-quarter revenue and pulled its own forecasts.
The company reported profit before tax and adjusting items of £405.6 million (€487.2m) for the six months to Aug. 3, compared with £398 million a year earlier, and consensus expectations of £384 million (€461.3m). Shares in the firm closed down more than 6 percent in London.
Profits were boosted by a ten-day contribution of £13 million (€15.6m) from the newly acquired US sports fashion retailer Hibbett, without which earnings were flat on a constant currency basis.
Revenue jumped 5.2 percent to £5 billion (€6bn). Organic sales growth was 6.4 percent, comprising 0.7 percent like-for-like growth and 5.7 percent from net new space. Hibbet, bought in April for £900 million, now represents around 40 percent of group revenue and is expected to contribute £25 million (€30m) to full-year profits.
| JD Sports Fashion - Income | |||
|---|---|---|---|
| H1 (£ million) | |||
| 2024 (adjusted) | 2023 (restated) | Change | |
| Revenue | 5,032.2 | 4,783.9 | 5.2% |
| Cost of sales | 2,604.2 | 2,466.5 | 5.6% |
| Gross profit | 2,428.0 | 2,317.4 | 4.8% |
| SG&A expenses | 1,769.1 | 1,685.0 | 5.0% |
| Administrative expenses | 382.3 | 273.8 | 39.6% |
| Other operating income | 12.2 | 13.1 | -6.9% |
| Operating profit | 292.2 | 374.8 | -22.0% |
| Finance income | 15.1 | 16.1 | -6.2% |
| Finance expenses | 181.0 | 37.2 | 386.6% |
| Net financial expense | 165.9 | 21.1 | 686.3% |
| Pre-tax | 126.3 | 353.7 | -64.3% |
| Tax | 74.1 | 96.2 | -23.0% |
| Profit | 52.2 | 257.5 | -79.7% |
| Diluted EPS (pence) | 0.42 | 4.23 | -90.1% |
| Source: JD Sport Fashion | |||
Total gross margin fell 20 basis points to 48.2 percent, reflecting a reduction of 10 basis points from the inclusion of Hibbett and of 10 basis points for the remaining business. The first-quarter margin was flat at 48.2 percent. At the same time, the Q2 decline of 40 basis points, of which 10 basis points was Hibbett, was driven mainly by the apparel category, impacted by a late spring/summer season with stronger sales during the seasonal discount period at a lower margin.
The overall earnings guidance range of £955 million to £1.03 billion (€1.14bn–€1.24bn) remained unchanged.
In the UK, trading was hit by weaker sales after attacks on Red Sea shipping by Houthi rebels based in Yemen slowed deliveries of key product lines. A wet spring and early Easter outside the camping season reduced demand for tents, other equipment and clothing, impacting the Millets and Blacks chains, with sales down 5.3 percent.
Sales at established stores were down 4.6 percent, also because of wet weather over the summer. This dampened footfall and full-price demand for seasonal ranges, including replica clothing for the 2024 Euro football tournament.
In Europe, growth continued to be driven by new store rollouts and conversions supported by a maturing estate and increasing market awareness, driving revenue growth of 14.7 percent. JD Sports said the performance was encouraging, given very strong like-for-like comparatives in the prior period and the impact of the Olympics in France, which softened Paris footfall in July.
| JD Sport Fashion - Sales | |||
|---|---|---|---|
| H1 (£ million) | |||
| 2024 | 2023 | Change | |
| Regions | |||
| UK | 1,498.7 | 1,525.9 | -1.8% |
| Europe | 1,547.1 | 1,482.0 | 4.4% |
| North America | 1,753.8 | 1,520.4 | 15.4% |
| Asia-Pacific | 232.6 | 255.6 | -9.0% |
| Total | 5,032.2 | 4,783.9 | 5.2% |
| Channels | |||
| Retail stores | 3,924.9 | 3,591.5 | 9.3% |
| Online | 1,043.8 | 1,059.6 | -1.5% |
| Other | 63.5 | 132.8 | -52.2% |
| Total | 5,032.2 | 4,783.9 | 5.2% |
| Product types | |||
| Footwear | 3,008.6 | 2,743.9 | 9.6% |
| Apparel | 1,501.3 | 1,490.2 | 0.7% |
| Accessories | 295.6 | 298.9 | -1.1% |
| Other | 226.7 | 250.9 | -9.6% |
| Total | 5,032.2 | 4,783.9 | 5.2% |
| Source: JD Sport Fashion | |||
North America revenue grew 14.5 percent, with like-for-like sales up 3.3 percent mainly driven by JD US facias. There were 275 JD stores open at the end of the period in North America, compared with 175 a year ago. Revenue grew by 0.2 percent in Asia-Pacific, driven by Thailand, Malaysia and Australia.
In the sporting goods and outdoors segment, revenue fell 4.5 percent to £710.3 million (€853m), impacted by four stores converted and now reporting under the JD brand and two closures. Like-for-like sales growth was 0.6 percent.
The company opened 83 new JD stores and transferred an additional 19 stores to JD from Finish Line in the US, MIG (Marketing Investment Group) in Eastern Europe and Iberian Sports Retail Group (ISRG) in Iberia.
JD Sports said it was still confident in its growth strategy, with plans to open around 200 new stores by year-end. Chief executive Regis Schultz is eyeing a large expansion into the American market, with around 700 new stores planned over the next four years. He added that he was sanguine about Nike’s future prospects. “I think we will see Nike come back. Nike is a strong brand, and it will be fine,” he said. Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “After a tough period of volatile conditions and missing market expectations, JD Sports looks to be back on the front foot. Recent retail sector data had pointed to increased discounting at shops to help keep the tills ringing. While that’s good news for customers, it’s not typically good for retailers who tend to feel the effect of increased price cuts on their profit lines. But filling the racks in JD’s stores are exclusive items from the likes of Nike and Adidas.”
Chiekrie also said the Hibbett purchase would increase the group’s store count by around a third and create “serious growth opportunities ahead if JD can nail its execution.”
