Pro Content

JD Sports Report First Half 2022 Financial Statement

Group Highlights

• Result for the first half at the top end of the Board’s expectations with profit before tax and exceptional items of £383.5 million (2021: £439.5 million) which includes:
• Continued robust performance in the sports fashion retail fascias in the UK and Republic of Ireland which delivered a profit before tax and exceptional items for the first half of £153.0 million (2021: £174.2 million)
• A return to profit in the sports fashion retail fascias in Europe which contributed to a profit before tax and exceptional items for the first half of £57.1 million (2021: loss of £7.2 million)
• A profit for the sports fashion retail fascias in North America of £130.4 million (2021: £245.5 million) with the performance in the period reflecting, as expected, the non-comparability of trading conditions in the United States as a result of the Federal fiscal stimulus in the prior year and the supply chain challenges of certain international brands which has led to reduced availability of key footwear styles, particularly in the first quarter
• Total revenue growth in organic retail businesses* of 5% with this level of growth continuing in the second half to date including a return to growth in the United States

International development of JD continues to progress positively:

• 51 net new JD stores opened across Europe including a first store in Hungary with the first store in Greece due to open shortly
• 101 stores now trading as JD in the United States with a flagship store in Chicago due to open in the second half
• Four JD stores in Indonesia and two JD stores in Israel opened under Joint Venture arrangements in the period meaning that the core JD fascia now has a retail presence in 27 countries
• Further progress in Australia with three new stores opened in the period and a first store in Adelaide opened subsequently

The Board maintains its view that the headline profit before tax and exceptional items for the year end 28 January 2023 will be in line with the record performance for the year ended 29 January 2022

Andrew Higginson, Non-Executive Chair, said:
“Whilst this has been a period of transition for the Board, it is reassuring that this has not impacted the financial performance of the Group which continues to deliver strong results with a profit before tax and exceptional items in the first half of £383.5 million (2021: £439.5 million). With this year expected to follow a more normalised trading pattern, this result is at the top end of our expectations for the first half demonstrating the ongoing resilience of our global proposition and the strength of our consumer engagement.

“The progress that the Group is making in its global markets is reflected by the fact that total sales in the Group’s organic retail businesses were 5% ahead of the prior year. This performance is very encouraging, as notwithstanding the non-comparability of trading conditions in the United States, the Group has also faced numerous other challenges in the period including the well-publicised shortage of supply from a number of the international brands and the challenging global macro-economic situation.

“JD continues to be the partner of choice for many international brands who see our premium fascias as the natural home for their latest ranges and freshest new styles. Our relationship with these brands and our access to product is as strong as it ever has been.

“We are delighted to welcome Régis Schultz to the Group as Chief Executive Officer. Régis has now commenced in the role with his induction into the Group, including introductions with key business leads and international brand partners, at an advanced stage. We firmly believe that Régis has the right characteristics and experience to lead the Group on the next phase of its journey . “We continue to be reassured by the ongoing resilience in the Group’s performance with trade to date through the second half following a similar trend to the first half with total sales in the Group’s organic retail businesses tracking around 8% ahead of the prior year after six weeks”Whilst the overall performance continues to be encouraging and the result for the half year was at the upper end of the Board’s expectations, it must also be recognised that the most material trading periods lie ahead. Given the widespread macro-economic uncertainty, inflationary pressures and the potential for further disruption to the supply chain with industrial action a continuing risk in many markets, it is inevitable that we remain cautious about trading through the remainder of the second half. Despite this, the Board maintains its view, at this point, that the headline profit before tax and exceptional items for the year ending 28 January 2023 will be in line with the record performance for the year ended 29 January 2022.”

Sports Fashion – UK and Republic of Ireland
We are encouraged by another robust performance in the sports fashion retail fascias in the UK and Republic of Ireland which delivered a profit before tax and exceptional items for the first half of £153.0 million (2021: £174.2 million). It should be recognised that the stores only re-opened from the middle of April in the prior year with full business rates only payable from July.

We are reassured by the resilient nature of the consumer demand across all our fascias with total revenue growth in the JD fascia compared to the prior year of approximately 7% with this business in particular performing strongly through the summer months benefitting from the increased demand for international holidays.

The UK and Republic of Ireland is the most mature market for the JD and Size fascias with developments such as the new flagship store at the Metrocentre in Newcastle demonstrating our ongoing commitment to continue raising standards of excellence in multichannel retailing. It is our belief that the integration of innovative digital technology into a vibrant retail theatre increases the attractiveness and desirability of our premium product ranges. The UK and Republic of Ireland is also the market where the JD and Size fascias have the greatest density of stores relative to the population with 440 stores at the period end (2021: 428). We maintain our belief that the store base at its current scale contributes positively to our development as it raises brand awareness, provides consumers with an opportunity to physically see and try the product, and enables us to offer multiple delivery points.

Elsewhere, we are pleased with the performance in our fashion businesses including Tessuti, Giulio and Mainline Menswear. More recently, Tessuti has opened its new global flagship store in Liverpool. With more than 21,000 sqft of retail space, this store sets new standards in the retailing of premium fashion brands combining classic design with the latest digital technology.

Sports Fashion – Europe 
We are also encouraged by the recovery that we have seen in our businesses in Europe with our combined businesses delivering a profit before tax and exceptional items for the first half of £57.1 million (2021: loss of £7.2 million). Clearly the stores being open for the full period has been very beneficial in driving an improved performance with total revenue growth in the JD fascia of more than 30% compared to the prior year.

The performance of JD in Europe is also benefitting from actions that we have taken to enhance our service proposition. This includes investing in local logistics capabilities with approximately 90% of product for JD stores in Western Europe now supplied by our warehouses in Southern Belgium and Northern France. Elsewhere, construction of the larger facility in Heerlen is ongoing with fulfilment from this facility expected to commence in the first half of 2024.

The operational challenges which we faced in Europe through the COVID-19 period were temporary in nature and have not changed our view on the long-term opportunity for JD across the continent. Accordingly, we remain committed to expanding our physical retail presence in Europe at pace with a net 51 new JD stores open in the period which includes nine new stores in Eastern Europe which have been opened by the MIG team and the conversion of 22 stores which formerly traded as Chausport in France. Working with the Cosmos team, the Group will open its first JD store in Greece imminently with a store at the Smart Park shopping mall in Athens. The JD team in Europe is also managing the joint venture in Israel with two stores opened in the period and three further stores anticipated to open through the second half.

Elsewhere, our other fascias, which includes our businesses focused on the Sporting Goods market, continue to progress with five additional new stores in the period across Iberia. The trial in the Netherlands which saw former Perry Sport stores being converted to the Sprinter fascia has now been extended with a further two stores converted in the period. The initial results from this trial, which allows us to present an enhanced offer in key active sports categories such as running and cycling, are encouraging and it is our intention to extend this trial into other stores in the second half.

Outdoor
This has been another period of revenue growth in our Outdoor businesses with total revenues increasing by 16.8% compared to the prior year. Whilst people may have had more international travel options than the prior year, it is clear that spending time outdoors more locally remains popular for many people who recognise the physical and mental health benefits that it provides. In particular, our businesses are seeing a strong demand for activity-based categories such as Fishing and Cycling with the Group benefitting from its recent investments in these areas. Further, the demand for Outdoor Living categories to support people on their camping trips, has also remained at elevated levels. However, the exceptionally dry and warm weather throughout the UK through the Summer period has depressed the sale of higher price and higher margin apparel ranges, particularly waterproofs.

We continue to invest in all of our fascias with a new Go Outdoors store opened in Bury and the relocation of our stores in Swindon, Gateshead and Derby. We have also opened our first two Wheelbase cycling concessions in the Go Outdoors stores at Coventry and Stockton. In addition, we have enhanced our position as an authoritative nationwide retailer in the fishing and equestrian categories with Fishing Republic concessions now in more than 50 Go Outdoors stores and Naylors Equestrian concessions in seven stores.