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UK sportswear retailer JD Sports has warned that annual profits will fall short of expectations as consumers cut spending, pushing shares in the group down as much as 16 per cent.
In a trading update on Thursday, the retailer said high levels of “promotional activity” last quarter had eroded margins. A milder autumn also hit sales, it added.
The group, which has expanded aggressively into the US in recent years and has about 3,400 stores in more than 30 countries, had shrugged off the challenges facing consumers in some of its major markets.
As a result of the weaker trading in the 22 weeks to the end of December, JD Sports said it now expected pre-tax adjusted profits of £915mn-£935mn for the 12 months to February 3, down from a previous forecast of £1.04bn.
Shares in the FTSE 100 group fell 16 per cent in early trading.
Chief executive Régis Schultz, who succeeded the group’s longstanding boss Peter Cowgill in late 2022, said: “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.”
The rare warning from JD Sports comes weeks after Nike, the world’s largest sportswear manufacturer, announced plans to cut $2bn in costs over the next three years due to softening consumer demand, particularly in China and Europe.
Analysts at Peel Hunt said external factors were mostly to blame for the profit warning. “The consumer is cautious and looking for a deal and with no especially exciting launches, it has been a dullish period,” they added.
