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JD Sports Fashion PLC (LSE:JD) has reported a significant improvement in sales growth for the past quarter, though profit margins were affected by promotional expenditures.
For the 13 weeks ending on August 3, the sportswear retailer experienced an 8.3% increase in organic sales, with a 2.4% rise on a like-for-like basis. This growth followed a softer first quarter, leading to a 6.4% increase in organic sales for the first half of the financial year, with like-for-like sales growth at 0.7%.
Chief Executive Régis Schultz highlighted robust double-digit organic sales growth in both North America and Europe. This performance was supported by the opening of 85 new JD-branded stores and the completion of the acquisition of Nasdaq-listed Hibbett just before the end of the reporting period. Schultz attributed the quarter-on-quarter improvement in trading to the effectiveness of the multi-brand operating model and more favorable comparisons with the previous year.
Despite these positive developments, the gross profit margin declined by 30 basis points compared to the previous year, and by 10 basis points for the first half overall. This decline was particularly pronounced in the clothing and online segments, with the UK experiencing the greatest impact.
Schultz addressed the challenges posed by the volatile global macro environment and maintained a cautious outlook for the remainder of the year. However, due to the trading improvements and a projected £15 million headwind from a stronger pound, the guidance for adjusted profit before tax remains between £955 million and £1,035 million, not accounting for the impact of Hibbett.
Overall, JD Sports Fashion PLC’s latest report reflects strong sales growth and strategic expansions, although the impact of increased promotional activities and a challenging global environment has affected profit margins. The company remains focused on maintaining robust performance while navigating ongoing economic uncertainties.
