JD Sports slips as poor weather brings slump in sales

JD Sports Fashion has warned that annual profits will be at the lower end of guidance after it suffered a slump in sales, which it blamed on suppressed demand and “unseasonable” weather.
The self-proclaimed “king of trainers” said it expected annual adjusted pre-tax profit to be at the bottom end of its £955 million to £1.04 billion forecast range, slashing its hopes to surpass £1 billion.
The update sent shares in the Manchester-based sportswear retailer down 17½p, or 15.5 per cent, to close at 95½p on Thursday. The stock has declined by about 32 per cent in the past year.
Régis Schultz, chief executive, said the tracksuits and trainers seller would struggle to meet its top-end profit guidance after “increased trading volatility in October”.
The company said it had a strong back-to-school period, but saw “softer consumer demand and trading toward the end of the period, reflecting elevated promotional activity, unseasonable weather and a cautious consumer, with evidence supporting suppressed demand in the US ahead of the election”.
A fall of 0.3 per cent in the three months to November 2 put like-for-like sales growth at 0.5 per cent for the year to date. In the third quarter, like-for-like sales were down 2.4 per cent in the UK, 1.5 per cent in the US and 3.8 per cent in Asia Pacific. Europe defied the slump, with sales in the third quarter up 3.5 per cent on the year.
Globally, stores continued to outperform online, and footwear continued to outperform clothing on a like-for-like basis, the company said.
The latest financial results for some of the world’s leading sportswear brands suggest the consumer love affair with activewear, which peaked during the pandemic when people were forced to stay at home, has started to slow down.
Nike, a big stockist for JD Sports, warned in October that it expected revenue in its current quarter to be down between 8 per cent and 10 per cent, and joined other sportswear brands in increasing its promotional activity for the remainder of the year to get rid of stock. Schultz has been clear that he has no plans to follow suit.
The sportswear industry has largely been dominated by Nike and Adidas, but in recent years shoppers have been searching for newer, trendier brands such as On and Hoka.
Schultz recently said he was not concerned about weaker demand for Nike products as JD Sports’ own business model was “agile — we know how to manage this multi-brand play. This is what we do for a living”.
Despite the recent slowdown, JD Sports remains one of the biggest and most successful sportswear retailers. The London-listed company, which was established in 1981, has more than 4,500 stores, mostly in the UK but also in Europe and North America. Much of this growth has been driven by the rollout of new stores, strategic partnerships with brands, and acquisitions.
JD Sports said it had made “good progress” on its bid for the French sneaker retailer Courir, saying it had satisfied all regulatory conditions and expected to complete the acquisition “shortly”.
Clive Black of Shore Capital, the broker, said JD Sports’ equity was “weak” ahead of the update, but was “relieved” that its profit before tax target remains within the guided range.
Analysts at Peel Hut said the share price reaction to “what is no more than a finessing of forecasts for most is extreme”. It said the purchase of Courir should be positive for earnings per share, and noted that the shares were trading at a level “too low for a retailer that is winning market share globally, even if the third quarter was slightly below hopes”.