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JD Sports Springs 3% Higher Despite H1 Profits Drop
Forbes·2025-09-24 08:35

Core Viewpoint - JD Sports experienced a significant decline in profits due to heavy discounting in a challenging retail environment, despite an increase in sales driven by acquisitions and new store openings [2][3]. Financial Performance - Sales rose 18% to £5.9 billion during the 26 weeks to 2 August, with organic turnover increasing by 2.7% compared to the same period in 2024 [2][3]. - Operating profit before adjusting items fell by 8.2% to £369 million, with operating margins decreasing by 180 basis points to 6.2% [3]. - Pre-tax profit before adjusting items was £351 million, down 13.5% year on year [3]. Market Dynamics - JD Sports opened 42 new stores in the first half and made acquisitions in the US and France, ending the period with 4,872 outlets [3]. - The company gained market share in North America and Mainland Europe, which accounted for 39% and 32% of total revenues, respectively [4]. - Like-for-like sales declined by 2.5% across all regions, with North American sales rising 3.1% organically but dropping 3.8% on a like-for-like basis [5][6]. Regional Performance - Organic sales in Europe increased by 6%, but like-for-like sales fell by 0.3% [6]. - In the UK, organic turnover decreased by 1.7% and like-for-like turnover dropped by 3.3% [6]. Future Outlook - The CEO indicated that the first-half growth in organic sales reflects the resilience of the business, although caution is warranted for the second half due to a tough trading environment [7]. - Analysts expect pre-tax profit before adjusting items to be £878 million for the 12 months to January 2026, a decrease from £917.2 million recorded in financial 2024 [7]. - A £100 million share buyback program was announced, reflecting the Board's view on the current share price levels [8]. Analyst Commentary - Analysts noted that margin pressure, increased promotional activity, and softer trading in key regions, particularly the US and UK, contributed to the decline in pre-tax profit [8]. - Continued investment in omnichannel infrastructure and brand partnerships is seen as a foundation for future growth, though the near-term outlook remains cautious due to macro uncertainties and ongoing margin risks [9].