Key Takeaways:
JD Sports Fashion reported adjusted pretax profit of 282 million pounds for the 26 weeks to Aug. 1, down 20% from 351 million pounds a year earlier, as gross margin slipped to 46.8% from 47.0%.
Chief Executive Regis Schultz called it a "resilient" performance against a "challenging backdrop of consumer cost-of-living pressures, footwear product cycle headwinds and a highly promotional market."
The Bury, Manchester-based retailer's adjusted pretax profit edged past the 279 million pounds company-compiled consensus, a beat of roughly 1%. Statutory pretax profit rose 75% to 241 million pounds from 138 million pounds, lifted by a fall in adjusting items to 41 million pounds from 213 million pounds, mainly the movement in present value of put and call options. Adjusted basic earnings per share fell 14% to 3.97 pence from 4.60 pence.
Revenue slipped 0.7% to 5.90 billion pounds from 5.94 billion pounds, with organic sales down 0.7% at constant currency and like-for-like sales down 2.8%. Gross margin of 46.8% came in below market expectations of 47.5%, which JD attributed to "controlled price investments" mainly online to "retain engagement and conversion in a highly promotional trading environment," partly offset by higher marketing contributions.
Apparel and accessories, up 4% on the year, offset footwear, down 3%, as JD pointed to a shift in the global footwear product cycle and fewer major launches from brand partners. North America like-for-like sales fell 4% and Europe declined 3.3%, while the UK slipped 1.4%. Asia Pacific was the strongest region, with sales up 3%. Online sales grew 5.2% on an organic basis and now account for 20% of group sales.
JD held its financial 2027 guidance unchanged from the reduced outlook set out in August: adjusted pretax profit of 700 million to 800 million pounds and free cash flow of 460 million to 520 million pounds. In the 52 weeks to Jan. 31, 2026, the company reported adjusted pretax profit of 852 million pounds and free cash flow of 462 million pounds, so the midpoint of the new range implies a decline of about 12%.
Chief Financial Officer Dominic Platt told Reuters that Nike, still JD's most important brand partner, remains "the most popular brand out there," pointing to performance ranges including Vomero and Pegasus. "It is just a matter of time," Platt said. "This is a big business and big businesses don't turn round in six months."
Third Bridge's Yanmei Tang said JD has historically relied heavily on Nike to drive customer traffic and is working to build stronger relationships with other brands as the sportswear giant's recovery takes longer than expected.
Julie Palmer, managing partner at advisory group BTG, said mid-range price players like JD have been hit by "a raft of challenges from energy and employment costs to the squeezing of consumer spending power." She added: "Occupying a space that hovers between value and luxury, it relies on the squeezed middle to spend."
The company flagged that several first-half headwinds may persist into the second half: a weaker spending environment for its core customer demographic, ongoing product cycle evolution in footwear at some major brand partners, and a promotional market backdrop. JD continues to expect the markets it operates in to grow 2-3% a year on average over the medium term.
Net cash before lease liabilities stood at 168 million pounds as of Aug. 1, compared with net debt of 125 million pounds a year earlier. Free cash outflow narrowed to 18 million pounds from 68 million pounds, which JD said is consistent with the usual seasonality of working capital outflows at the mid-year point. The interim dividend rose 21% to 0.40 pence per share from 0.33 pence.
JD has also pushed international expansion, signing a franchise agreement with Grupo Axo that will see more than 140 JD shops open in Mexico from 2027. The group operated 4,811 stores as of Feb. 1, 2026, with 2,519 of them in North America.
Shares fell 0.5% to 78.30 pence in London on Wednesday morning, having risen 6.4% the previous session. The stock is down 9.6% so far this year, against a mean analyst consensus of "outperform" and an average target price of 1.023 pounds, implying about 30% upside, according to MarketScreener data covering 18 analysts.
The margin line is the number to watch: a 70-basis-point miss on gross margin against a 1% profit beat leaves little cushion if promotional pressure carries into the peak Christmas trading period. JD's next scheduled update is its third-quarter trading statement, expected in late November, when investors will look for evidence that footwear comparatives are easing and that North America like-for-like sales have stopped falling.
This article is for informational purposes only and does not constitute investment advice.
