JD Sports warns of ‘muted growth’ amid weak consumer spending
JD Sports has seen profit fall as the sportswear retailer warned it is preparing for a period of “muted” growth amid weak consumer spending and potential Iran war cost pressures.
Pre-tax profit at the FTSE 100 firm fell by 12 per cent to £629m in the year to January, even as sales rose by 12 per cent to £12.7bn.
The sportswear retailer was thrown into boardroom chaos last month, when chair Andy Higginson quit after reportedly failing to convince the board to eject its chief executive.
JD Sports said on Thursday it is preparing for “muted market growth” in the coming year, “shaped by a weaker spending outlook for our core customer demographic and ongoing product cycle evolution at some of our major brand partners, particularly in footwear”.
Consumer confidence has plummeted to its lowest level in more than two years, as Brits cut back on non-essential spending over inflation fears.
JD faces drop in ‘tough’ UK sales
JD Sports said it is yet to take a hit from the Middle East war, but warned cost hikes could be coming down the track and it may have to hike prices to keep up.
The company said it has no direct sale-side exposure to the Middle East market, where it operates only eight franchise stores.
The retailer issued wider profit guidance than it was “previously planning” to account for the “uncertainty” posed by the Iran war, forecasting a pre-tax profit of between £750m and £850m for the next year.
JD Sports saw organic sales drop by 2.5 per cent to £3.1bn in the UK, while sales jumped by nine and four per cent in Asia Pacific and Europe.
The retailer attributed its drop-off in UK sales to “a tough consumer backdrop” and falling online sales, saying it faced particularly strong competition in the female athletic footwear market.
Organic sales in the UK dropped by 3.6 per cent in the last three months, as wet conditions drove low in-store footfall, the retailer said.
24 UK stores shut
JD Sports shut 24 stores in the UK in the last year, though the retailer saw 107 net openings in North America.
The firm’s share price jumped by three per cent on Thursday’s market open, to 70p, leaving the stock down 18 per cent in the year so far.
Chief executive Régis Shultz said his firm is adopting a “control the controllables” strategy, as it aims to maintain cash headroom and offer a dividend to shareholders in coming years.
He said: “Whilst we continue to expect muted market growth in full-year 2027, we remain confident in JD Group’s medium‑term trajectory, underpinned by our strong brand partnerships and agile, multi‑brand model.
“For the year ahead we are focused on further enhancing and optimising our product offer, customer experience and store footprint, and delivering strong cost and cash discipline.”
Recently departed chair Andy Higginson reportedly attempted to convince JD Sports’ boardroom to oust Shultz, but instead departed himself after he failed to push out the chief executive.