JD Sports shareholders hoping for progress amid US consumer weakness
JD Sports investors will be hopeful the retailer can show signs of progress next week after sales came under pressure at the start of the year.
The impact of US tariffs and its overall performance in the US will be particularly in focus when it provides a half-year trading update on Wednesday 27 August.
Shares in the business have ticked slightly higher over the past six months but are still firmly down over the past year after a profit warning in January and broad caution over consumer demand.
In its previous update in May, the London-listed sportswear specialist revealed that like-for-like sales dipped by two per cent over the quarter to 1 May.
However, organic sales grew by 3.1 per cent in the quarter as new store openings helped to offset soft demand from shoppers.
In the UK and Europe, sales were slightly stronger after positive weather conditions at the start of the year.
Jonathan Pritchard, analyst at Peel Hunt, said the business will face “tougher” comparatives in the second quarter and highlighted that “wider global trends have not been helpful”.
He added that he believes the company is “in a very good place” strategically and could benefit from new product releases from Nike, as the key supplier partner seeks to rebound following recent weakness.
Other analysts, however, indicated that recent troubles at Nike and weak consumer sentiment in the US will present a continued challenge for JD Sports.
Danni Hewson, head of financial analysis at AJ Bell, said: “Ongoing worries over momentum (or lack of it) at Nike, which faces greater competition from the likes of On and Hoka, continue to weigh, even if Nike is by no means JD Sports’ only brand partner.
“Worries about wider trends in consumer spending and the impact of the Trump tariffs also remain an issue.”
Sales in the US were firmly lower in the first quarter, so investors will be hoping that the company can point to an improving trajectory despite pressure from tariffs.
Bosses at JD previously warned that the cost of goods and services in the US was likely to rise because of tariffs, which could result in price increases which may then weigh further on demand.
Shareholders will also be hoping for any indication as to the retailer’s profit outlook, although JD is likely to hold this back until a more thorough update next month.
The group is currently predicted to reveal profits of around £890m for the current financial year, down slightly on the previous year.
By Henry Saker-Clark, PA Deputy Business Editor