JD Sports share price rises: Retailer posts record first half profit but warns National Living Wage will bite

 
Jessica Morris
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JD Sports warned on the impact of the living wage (Source: Getty) (Source: Getty)

JD Sports share price climbed 1.4 per cent this morning as the retailer revealed record first-half profit. But the company has tempered its outlook for the future with a warning over the impact of the Living Wage - yet another company to do so.

The figures

JD Sports' adjusted pre-tax profit jumped 82 per cent to £46.6m in the six months to 1 August, while its revenue rose 21 per cent to £809.9m.

Like-for-like sales jumped more than 10 per cent on a combined basis, led by demand for branded trainers such as Nike.

Why it's interesting

The sports fashion group's margins outside the UK were slightly lower than previous years due to the weak euro, dragged down by the ECB’s unprecedented bond-buying.

"The financial impact of this may currently be small in the context of overall earnings but it is an escalating issue as we expand our presence in Europe," said executive chairman Peter Cowgill. "We are maintaining a long-term view on our European development project and will continue to address the issue both internally and externally with our international brand partners."

The company also warned that the additional costs of the Living Wage, which comes into play in April, would affect "earnings across the retail sector".

What JD Sports said

The "King of Trainers" is not feeling so optimistic about this part of the business looking ahead.

"In an extremely competitive market for sports fashion footwear across Europe, we must acknowledge that the levels of organic growth that we have seen over the last two years are unlikely to continue indefinitely, albeit the JD brand continues to strengthen and further opportunities prevail," Cowgill said.

"Our current successful exploitation of these favourable market conditions reflects investments that we have made over a number of years in developing our multi-channel retail proposition and driving improved buying, merchandising and retailing disciplines. We continue to invest heavily in these areas."

"Given the demanding comparatives following two years of strong revenue growth, we are encouraged by the positive nature of the trading to date in the second half across our core fascias."

In short

It's been a stellar two years for JD Sports, and while the pace is continuing currently there are potential clouds forming on the horizon.

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