JD Sports cautions on outlook as unemployment rises; boss urges Reeves not to hike labour costs
High-street retailer posts a 2.5% revenue decline in six months to August; UK sales fall 3.3% amid inflation and higher unemployment expectations
JD Sports Fashion PLC warned on the outlook as unemployment trends worsen, reporting a 2.5% slide in sales in the six months to the start of August, with UK revenue down 3.3% as shoppers grapple with higher living costs.
Chief executive Regis Schultz told investors he remained cautious about the second half of the financial year due to continued pressure on consumer finances and elevated unemployment risk. He urged Chancellor Rachel Reeves not to increase the cost of giving people jobs, saying, 'Don't increase the cost of labour. Make sure that we keep competitive, keep the UK competitive in the world.'
JD operates in North America, Europe and Asia as well as the UK. Sales totalled £5.94 billion in the half, while profits fell 13.5% to £351 million. The UK was dented by tough year-ago comparatives when football shirt sales were boosted by Euro 2024, while North America revenue fell 3.8%.
Shares and market reaction were muted, with the stock quoted as trading near 87.94 pence. The group declared an interim dividend of 0.33p a share and said the second £100 million tranche of its buyback, announced recently, would begin soon. The shares closed down about 0.7% on the day, having fallen almost 43% in the past year.
Analysts described the outlook as challenging. Garry White, investment commentator at Charles Stanley, said: 'It’s going to be a tricky second half. The backdrop is not improving, it’s probably getting worse. Consumers are cautious, especially in the UK. To add to sticky inflation and a slowing economy, they face the unknown of Rachel Reeves’s Budget, where tax rises look a certainty.'
Nike products make up about 45% of JD's sales, and the group said its Nike-facing strategy was being reset. Dominic Platt, JD’s finance chief, said Nike was doing 'all the right things' to revive demand, with new products resonating with customers as the company seeks to reclaim ground in running and other lines.
Donald Trump’s trade tariffs were noted as having a limited impact on JD’s results, with management saying the effect on its international operations was not material at this stage. The company remains a global retailer with a presence in North America, Europe and Asia, and it continues to navigate a consumer environment characterized by higher interest rates and inflation.
Investors will watch how Reeves’s Budget and any tax measures could affect discretionary spending in the UK, as retailers brace for a potentially tighter consumer environment in the second half of the year.
