JD Sports: Shares slump as profit at FTSE 100 giant to be at lower end of expectations

JD Sports has revealed its full-year profit will now be towards the lower end of its expectations after softening consumer demand hit its sales.

The Greater Manchester-headquartered FTSE 100 giant had previously set a target for its pre-ta profit of between £995m and £1.035bn but it has now confirmed the total will be towards the lower end of the range.

Its share price slumped more than 12 per cent in early trades. The price has fallen by nearly 40 per cent in the year to date.

In a statement issued to the London Stock Exchange, JD Sports said customers have been getting increasingly cautious about spending in recent months.

The third quarter update also confirmed that the group’s like-for-like sales in the UK dropped 2.4 per cent in the 13 weeks to 2 November, and company-wide sales fell 0.3 per cent overall.

JD Sports said a combination of “elevated promotional activity, unseasonable weather and a cautious consumer” has affected sales, with demand particularly soft in October.

In the year to date, UK revenue has dropped by 1.1 per cent, while overall revenue has increased by 6.1 per cent.

“JD Sports’ goal of scoring £1 billion in annual profits has been kicked down the road for the second year in a row,” said Dan Coatsworth, investment analyst at AJ Bell.

“It was previously hoping to join the club of UK-quoted retailers with this accolade and get its membership badge at its next set of full-year earnings, putting itself alongside a high street elite that has at different points included Tesco, Marks & Spencer and B&Q-owner Kingfisher.

“Some may view this £1bn figure as merely symbolic, but breaching this barrier is no mean feat and demonstrates a retailer has a lasting place in consumers’ affections and the scale to win in a competitive marketplace,” Coatsworth added.

Peel Hunt analysts said: “One quarter can never derail a strategy, and the company reiterated its long-term targets… organic growth [is] in line with hopes.”

“Anything resembling a return to the Summer’s trading form would put the low end of the £955-1,035m range well in reach,” analysts added.

The company has continued to focus on its store roll out plan, with 79 new shops opened during the period. It said stores continued to outperform online sales.

The total number of stores at the period end was 4,541, up 1,224 from the start of the year, including 1,179 stores acquired with Hibbett.

Earlier in 2024, JD Sports said it would pay £878m for Hibbett, an Alabama-headquartered ‘fashion inspired’ retailer with stores in 36 states across the States. It expects Hibbett to contribute around £25m to its profit before tax this year.

JD Sports’ plans to purchase French trainers brand Courir were also approved by regulators during the quarter, and it expects the transaction to complete “shortly”.

‘Trading environment remains volatile’ – JD Sports boss

Régis Schultz, CEO of JD Sports, said: “After a good start to the period, helped by strong back-to-school sales, we saw increased trading volatility in October, particularly in North America and the UK, reflecting elevated promotional activity and mild weather.

“Against this backdrop, we maintained our commercial discipline, improving gross margin by 0.3 per cent while still delivering 5.4 per cent organic sales growth. In addition, we made further, strong progress on our long-term growth strategy including opening 79 new JD stores across the world.

“We have performed well in the key trading events this year and we are well positioned for the upcoming peak season.

“The trading environment remains volatile though and, following October trading, we now anticipate full year profit to be at the lower end of our guidance range.”