The UK-based retailer JD Sports forecast flat like-for-like sales for the full financial year, FY24, adding that annual profits would be no more than £935 million (€1.1bn), down from previous forecasts.
Shares in the company fell 10 percent in London trade as CEO Regis Schultz said the company was taking a “cautious” view of the new financial year amid tough market conditions. Concerns about consumers cutting back discretionary spending and a weaker sales performance at Nike, which makes up around 45 percent of JD Sports sales, have impacted on the retailer in the back end of 2024.
Sales at established stores fell 1.5 percent in November and December in a “challenging and volatile market that saw increased promotional activity”, despite a rebound in Christmas resulting in a 1.5 percent like-for-like revenues for the year’s final month.
There was a strong LFL revenue performance from the sporting goods and outdoor segment, while growth in Europe and Asia Pacific partially offset weaker trading across the UK and North America.
Footwear sales grew and outperformed apparel, and physical stores outperformed the online channel.
Regarding new acquisitions, Hibbett traded slightly ahead of the wider North America business and Courir traded well across the weeks following its takeover.
“In line with our proven long-term approach, we chose not to participate in what was a more promotional environment in the period than we anticipated, fully maintaining our trading discipline to deliver gross margins ahead of last year, clean inventory and strong cash management,” Regis said, adding that gross margins in the nine weeks to January 4 were ahead of last year with the FY gross margin maintained at around 48 percent, in line with last year.
Analysts at broker Shore Capital said they expected to lower their profit outlook for fiscal 2025 and 2026 “reflecting management’s view that this more challenging market will persist”, the broker said. “However, we remain positive on the longer-term prospects of the business, with solid margins and cash generation in the UK business, growth opportunities in ex-UK and all backed by a strong balance sheet.”
