After sales at JD Sports Fashion’s sales fell short of expectations in the 22 weeks to December 30, the British retailer, which owns Go Outdoors, Blacks, Millets and other retail brands, lowered its profit guidance for the full year.
According to the company, organic sales growth at constant currency was 6 percent in the 22 weeks, while like-for-like growth was 1.8 percent. “This was slightly behind our expectations. Apparel revenue growth was impacted by milder weather from the second half of September, while the peak trading season, across the market, was softer and more promotional than we anticipated, reflecting more cautious consumer spending,” said the company. For the full year ending Feb. 3, the company expects organic revenue growth to be about 8 percent.
The gross margin rate for the 22-week period was in line with the prior year. “This is lower than our expectations due to the elevated level of promotional activity during the peak trading period, and therefore we now anticipate the full-year gross margin rate will be slightly lower than last year,” JD Sports added.
For the full year, it now estimates profit before tax and adjusted items will be £915–935 million (€1.061–1.084 bn), down from a previous forecast of £1.04 billion. “As we approach the year-end, we remain comfortable with our current inventory position,” the company said.
”We have made good progress against our five-year strategic plan, delivering global organic revenue growth of 6 percent in the period, against very tough comparisons with last year, and opening over 200 new JD stores in the year,” commented Régis Schultz, JD’s CEO. “Our key markets have seen increased promotional activity during the peak trading season, driven by a more cautious consumer, but we continue to grow market share. We are confident in our strategy, and we continue to invest in our supply chain, systems and stores, supported by our strong cash generation and healthy balance sheet.”
Following the profit warning from JD Sports, its shares fell by 22 percent on the morning of Jan. 4 to their lowest level in a year.
