The UK sports retailer said revenues over November and December were 1.5% lower than the same period a year ago, when compared like-for-like, as it lowered its profit outlook for the year
JD Sports has downgraded its profit forecast for the year, citing a challenging fashion market that saw competitors offering heavy discounts in the lead-up to Christmas.
The company’s shares fell by roughly 10% on Tuesday morning following the announcement. The UK sports retailer reported that revenues over November and December were 1.5% lower than the same period last year, on a like-for-like basis.
Weaker demand in the UK and North America was balanced out by sales growth in Europe and Asia, leading JD to predict that full-year revenues will be more or less flat. Despite this, the company enjoyed a robust Christmas period with sales soaring 28% over the week, exceeding £400m, following a 14% increase in sales during the Black Friday period.
The retailer, known as the “king of trainers”, disclosed that it sold over two million pairs of Nike AF1s and Nike Dunks in North America across the two-month period.
However, JD chose not to participate in a higher-than-expected level of promotional activity, meaning it did not compete with other retailers offering heavy product discounts. This tougher market means it now anticipates reporting a pre-tax profit for the year of between £915m and £935m.
It had previously predicted that annual profits could exceed the £1bn mark. But in November, it said it expected profits to be at the “lower end” of its guidance range, which was between £955m and £1.04bn.
JD Sports’ chief executive Regis Schultz said: “While I am pleased overall with our performance, market headwinds were higher than we anticipated and therefore our full year profit forecast is slightly below our previous guidance. With these trading conditions expected to continue, we are taking a cautious view of the new financial year.”
Mamta Valechha, an analyst at Quilter Cheviot, stated that JD Sports “appears to be suffering at the hands of what is a very difficult retail market”. Valechha added that JD Sports’ struggles are largely linked to Nike, which has faced declining sales due to increased competition and is now planning a turnaround.
