Britain’s largest sportswear retailer JD Sports has issued a stark warning to Chancellor Rachel Reeves, demanding an immediate halt to employment cost increases as the company grapples with a significant 13.5% profit decline and rising youth unemployment concerns that threaten the retail sector’s stability.
JD Sports Employment Costs Warning to Government
Chief executive Régis Schultz delivered a forceful message to the Treasury, stating that further increases in JD Sports employment costs would severely damage competitiveness and exacerbate youth unemployment trends. Consequently, the retailer faces mounting pressure from both domestic policy changes and international market challenges.
Profit Decline and Market Challenges
JD Sports reported concerning financial results with first-half profits falling 13.5% to £369 million. Meanwhile, the company experienced several significant challenges:
- US market weakness due to consumer caution and tariff uncertainties
- Supplier issues with key partner Nike affecting inventory
- Athleisure market slowdown impacting overall sales performance
Youth Unemployment Impact on Retail
Schultz emphasized that younger consumers represent JD Sports’ core customer base, making youth unemployment trends particularly worrying for the retailer. Additionally, he noted that while budget-conscious shoppers are cutting back, dedicated sneaker enthusiasts continue spending on premium products when the quality justifies the price.
Global Running Boom Drives Growth
Despite these challenges, JD Sports recorded an 18% sales increase to £5.9 billion, largely driven by the global running boom. Popular brands including Hoka, On Running, and Adidas Evo performed exceptionally well, demonstrating strong consumer demand for specialized athletic footwear.
Future Outlook and Christmas Strategy
The retailer maintains confidence in hitting full-year targets, banking on the running category’s continued strength and strategic partnerships. Furthermore, Schultz expressed optimism about Nike’s recovery potential, stating the brand “still has the magic” despite recent supply chain difficulties.
Frequently Asked Questions
What specific employment cost increases is JD Sports concerned about?
JD Sports references the Chancellor’s last budget, which raised staff expenses for retailers. The company worries additional increases would further strain operational costs.
How much did JD Sports profits decline?
First-half profits fell 13.5% to £369 million, primarily due to US market weakness and supplier challenges.
What percentage of JD Sports US sales face tariff exposure?
Less than 10% of American sales are directly exposed to potential new tariffs, limiting short-term impact.
How has JD Sports stock performance been affected?
Shares have declined 42% over the past year amid broader market challenges and specific operational issues.
What growth categories is JD Sports focusing on?
The company is betting heavily on the global running boom, with brands like Hoka and On Running driving significant sales growth.
When does JD Sports expect the next budget announcement?
The retailer has specifically warned against employment cost increases in November’s upcoming Budget announcement.
