Unlock Editor’s Digest for free
FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
British sportswear retailer JD Sports has warned that its annual profit will fall short of expectations as consumers cut back on spending, causing its FTSE 100 group share price to fall by more than 20%.
The company said in a trading update on Thursday that high levels of “promotional activity” last quarter had reduced profits, while a mild autumn had also impacted sales.
The group has expanded aggressively into the U.S. in recent years, with about 3,400 stores in more than 30 countries, but has avoided challenges faced by consumers in some key markets.
As a result of weaker trading in the 22 weeks to the end of December, JD Sports now expects pre-tax adjusted profits to be between £915m and £935m for the 12 months to 3 February, up from previous levels. It was announced that the price had been revised downward from the forecast of 1.04 pounds. bn.
Chief executive Regis Schulz, who took over from long-time head of the group Peter Cowgill at the end of 2022, said: “We are experiencing peak trading in our key markets, driven by more cautious consumers. “While promotional activities have increased during the period, we continue to expand our market share.”
The unusual warning from JD Sports comes as Nike, the world’s largest sportswear maker, announced plans to cut costs by $2 billion over the next three years, citing slowing consumer demand, particularly in China and Europe. It was issued a week later.
“Consumers are cautious and looking for deals, and it’s been a dull period with no particularly exciting new products,” Peel Hunt analysts said.
In the 22 weeks to the end of last year, the group’s organic revenue rose 6%, with underlying growth of 1.8%, below JD Sports’ own expectations.
The company doesn’t break down its results by region, but analysts at Investec say the UK and US are likely to be the biggest drags on profits.
Shares in the FTSE 100 group fell more than 20% on Thursday.
Mr Schulz announced in February that he would invest up to £3bn and open up to 1,750 stores worldwide over the next five years. He said Thursday that the company is making “good progress against its five-year strategic plan” and opening more than 200 new stores in a year.
Richard Chamberlain of RBC Capital Markets was bullish on the long-term outlook. “We believe JD Sports should maintain its position as a preferred partner for major sportswear brands such as Nike and Adidas,” he said.