JD Sports is “back on the front foot” after reporting record interim results amid volatile conditions and signalling hope for significant growth in the US. But shares in the sportswear giant tumbled by nearly 7% amid currency headwinds.

JD, which has around 4,500 stores, posted a 2% rise in profit before tax and adjusting items of £405.6 million for the 26 weeks ended August 3. That came as revenue surged by 5.2% to £5.03 billion, as JD highlighted the strength of its multi-brand strategy and ability to “adapt swiftly to fast-changing industry trends”.

It also flagged the “key milestone” of its acquisition of Hibbett Inc in the US, completed shortly before period end, which the company declared would be crucial to its international growth hopes.

However, pre-tax profits fell by 64.3% to £126.3m on a reported basis, which JD said mainly reflected non-cash items relating its acquisition of Hibbett and the closure of its distribution centre in Derby.

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JD Sports acquired Alabama-based Hibbett, an athletic-inspired fashion retailer, in a deal worth around $1.08bn. With 1,179 stores in south-eastern USA, the UK-listed company said Hibbett has brought it “material scale and presence” across the Atlantic. Hibbett is expected to contribute around £25m of pre-tax profits to JD in the current financial year.

The company reiterated that it is experiencing currency headwinds as the pound strengthens against the US dollar and the Euro. Foreign exchange impacts reduced profit before tax and adjusting items by £6m in the first half, and are expected to dent profits by £20m in the second half, JD said.

And it reported that gross margins had dipped to dipped to 48.2% from 48.4%, excluding Hibbett, amid elevated promotional activity, in line with the previous period, with the company noting that good cost control had offset future growth investment.

The firm recommended a 10% increase in interim dividend to 0.33p per share, and left guidance for full-year pre-tax profits unchanged at £955m to £1.035bn.

Aarin Chiekrie, equity analyst Hargreaves Lansdown, said: “After a tough period of volatile conditions and missing market expectations, JD Sports looks to be back on the front foot.

“Recent retail sector data had pointed to increased discounting at shops to help keep the tills ringing. While that’s good news for customers, it’s not typically good for retailers who tend to feel the effect of increased price cuts on their profit lines. But filling the racks in JD’s stores are exclusive items from the likes of Nike and Adidas.

“JD is known for its strong brand relationships and is even Nike’s single largest partner globally. Offering these ‘JD Exclusives’ has helped to keep luring customers into stores and paying full price, so profitability has remained in good shape. Sales have improved throughout the first half, with double-digit growth in North America and Europe helping to keep full-year guidance on track, which points to pre-tax profits of between £955-1,035mn."

Regis Schultz, chief executive of JD Sports, said: "We have today reported record interim results with group revenue of £5.0bn, and profit before tax and adjusting items of £405.6m, underscoring our ability to outperform the sector in a volatile global marketplace. Our success is a direct reflection of the strength and agility of our global, multi-brand strategy, which allows us to adapt swiftly to fast-changing industry trends across the world, and our operational excellence. This ensures we continue to deliver an industry-leading customer proposition both in store and online.”

Mr Schultz added: "Our acquisition of Hibbett Inc, which completed just before the period end, is a key milestone in our international development and advances the global nature of the group through our strengthened position in the US. I remain confident in the delivery of our exciting growth plans for North America and that the group is well positioned to continue growing share in the world's largest sportswear market.

"I am very proud of our teams across the globe, whose dedication and hard work have been instrumental in achieving these results. Our strong business model and clear strategy position us to deliver long-term growth and value creation for our shareholders."

Shares in JD Sports closed down 6.92%, or 10.45pm, at 140.65p.