In a challenging market environment, JD Sports Fashion reported a significant drop in operating profit despite a rise in revenue.
- Revenue for the 52 weeks ending 27 January 2024 rose by 2.7% to £10.4 billion, yet profits fell by 8.1% to £973.9 million.
- The decline in profit was attributed to increased wages and investment costs, with online sales experiencing a notable decrease.
- A strategic focus on retail expansion saw over 200 new stores opened, counterbalancing the online sales decline.
- Regional performance varied, with the UK experiencing a downturn while European and North American markets showed growth.
In a challenging financial year, JD Sports Fashion reported a 2.7% increase in revenue to £10.4 billion, despite a significant 8.1% fall in operating profit before adjusting items, accumulating to £973.9 million. This performance is largely attributed to increased operational costs, including rising wages and substantial investment expenditures.
JD Sports described the market condition as ‘very challenging’, a sentiment reflected in the 8% year-on-year decline in profit before tax and adjusting items, totalling £912 million. The second half of the year proved particularly tough with decreased revenue impacting financial outcomes.
Regionally, the UK market faced an 8.3% decline in revenue to £3.5 billion, whereas Europe enjoyed a robust 16.3% increase to £3.1 billion. North America also performed well, with an 8.4% rise totalling £3.4 billion in revenue. The Asia Pacific region contributed a 7.5% sales growth, reaching £524.8 million. The distribution of total revenue saw the UK at 33%, North America at 32%, Europe at 29%, and Asia Pacific at 5%.
Among sales channels, JD Sports reported an 8.9% revenue increase via retail stores, reaching £8 billion, highlighting a strategic shift back to brick-and-mortar shopping, reflected by a 7.6% decline in online sales to £2.3 billion. The ‘JD brand first’ strategy spearheaded the opening of over 200 new stores during the financial year, with plans to continue this expansion into FY25.
Product category performance was mixed; footwear experienced an 8.2% increase in revenue to £5.9 billion, while clothing faced a 4.3% decline to £3.4 billion, affected by mild autumn/winter weather. Accessories and other revenue streams, encompassing outdoor living equipment, delivery income, and gym memberships, showed 6.4% and 17.3% growth respectively.
Looking ahead, JD Sports maintains its full-year guidance of profit before tax and adjusting items to range between £955 million and £1 billion. CEO Régis Schultz emphasised strategic progress, asserting, ‘We have started the new financial year with Q1 in line with our expectations in a volatile market and we are on track to deliver our profit guidance for the full year.’
Ultimately, JD Sports remains committed to its strategic vision amidst ongoing market volatility, with a focus on long-term growth.
