- Donald Trump has put a 10% baseline tariff on US goods imports
JD Sports has warned that prices of some products and services for US customers could rise following recently imposed tariffs.
The sporting goods retailer said visibility on the possible impact from tariffs was low, but short-term consumer demand in the US may be affected.
President Donald Trump has put a 10 per cent baseline tariff on US goods imports, as well as a 30 per cent tax on products from China, where JD’s third-party brands source a significant amount of their stock.
JD has expanded considerably in North America over the past few years, acquiring brands like Finish Line, Shoe Palace, and Baltimore-based DTLR.
Its takeover of Hibbett in July last year helped the company’s turnover in the region soar by £890million to £4.2billion in the 12 months ending 1 February.
By comparison, JD said its UK revenues declined by 3.7 per cent to around £2.7billion due to the disposal of non-core businesses and a ‘challenging UK retail environment.’
Caution: JD Sports has warned that prices of some products and services for US customers could rise following recently imposed tariffs
The Bury-based firm’s total turnover still rose by 12 per cent to £11.4billion as higher European sales offset lower domestic trade and footwear orders jumped by almost £900million to £6.8billion.
However, its pre-tax profits shrank by 11.8 per cent to £715million, mainly because of a £53million increase in adjusting items and investment in new stores and distribution centres.
JD also revealed its like-for-like sales were 2 per cent lower year-on-year in the first quarter of this financial year amid subdued consumer confidence in North America.
Yet organic revenues expanded across all territories, including the UK, where they rose by 2 per cent thanks to beneficial weather.
Régis Schultz, chief executive of JD Sports Fashion, said: ‘Overall trading in the first quarter of the new financial year has been in line with our expectations in a volatile market.
‘Despite this volatility, and uncertainty surrounding the impact of US tariff changes, we look forward into the medium term with confidence that we can continue to outperform the market, improve our profit margin and create significant value for our shareholders.’
JD Sports Fashion shares nonetheless slumped 9.9 per cent to 83.8p by late Wednesday afternoon, making them the FTSE 100’s biggest faller.
Soon after taking over, Schultz unveiled an ambitious strategy for the company to open between 250 and 350 stores each year in key markets.
On a net basis, the group launched 223 new JD outlets last year, including ones in Westfield Stratford City, the Bluewater shopping centre in Kent, and on Paris’s iconic Champs Élysées.
Russ Mould, investment director at AJ Bell, remarked: ‘JD has thrived on consumers’ willingness to load up on the latest footwear, with many people viewing trainers and sneakers as collectables rather than functional items.
‘It has also capitalised on the athleisure boom, selling a wide range of fitness clothing to the mass market.
‘There is a risk both of these trends run out of steam or at least go through a temporary moment of weakness as individuals reassess their spending choices.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .