JD Sports Fashion Faces Profit Guidance Cut as Sportswear Market Slumps

Shares in JD Sports Fashion took a nosedive on Thursday, tumbling 22% as the sportswear retailer slashed its profit guidance. This comes as yet another indication of a slump in the global sportswear market. Nike's warning of a drop in consumer spending last month seems to have taken its toll.

JD Sports Fashion, headquartered in Manchester, blamed its weaker-than-expected sales during its peak trading period for the profit guidance cut. Sales for the 22-week period ending December 30 fell behind the company's expectations. Unfavorable weather conditions in September and cautious consumer spending were identified as key factors contributing to the disappointing sales figures.

The company has now revised its pre-tax profit guidance for the full-year ending on February 3. Initially projected at £1.04 billion ($1.3 billion), it has been revised to a range between £915 million and £935 million. JD Sports also highlighted increased expenditure on promotional activities due to the consumer spending slowdown, which will further impact profit margins.

Originally a single shop in Bury, a suburb of Manchester, JD Sports has experienced slower-than-anticipated growth during this peak trading period. While constant currency revenues grew by 6% and like-for-like growth stood at 1.8%, it fell short of their expectations.

Following JD Sports' announcement, apparel sellers Puma and Adidas both observed a 3% decrease in their shares.

Overall, these developments shed light on the challenging state of the sportswear market and its impact on major retailers like JD Sports Fashion.

JD Sports' Trading Update

JD Sports, a global retailer, has released its trading update following Nike's decision to revise its guidance in December. Nike is anticipating a decline in consumer spending in its Europe, Middle East, and Africa, as well as Greater China regions. In response, Nike plans to implement cost-saving measures worth $2 billion over the next three years. Furthermore, Nike now expects its revenues to grow by only 1%, a significant decrease compared to its previous forecast of mid-single digit growth.

💰 Ambitious Expansion Plans JD Sports, under the leadership of CEO Régis Schultz, has revealed its ambitious plan to invest £3 billion in opening 1,750 new stores globally. The company intends to establish between 250 and 350 new stores each year. Pleased with the progress made thus far, Schultz proudly announced that JD Sports has successfully opened 200 new stores during the current year.

📈 Growing Market Share Despite the challenging market conditions characterized by increased promotional activity during peak trading season, JD Sports remains resilient. Schultz stated that the company has observed heightened promotional competition due to a more cautious consumer. Nevertheless, JD Sports continues to thrive and grow its market share. The company's robust cash generation and healthy balance sheet enable it to confidently pursue its strategic endeavors. JD Sports remains committed to investing in its supply chain, systems, and stores.

👕 Positive Trend for U.K. Retailers In contrast to the overall market sentiment, British clothing retailer Next offers some encouraging news. Next has raised its guidance, resulting in a significant increase in its share price by 5%.

📊 European Stock Market Performance The late morning trade showcases a generally positive trend for most European stock markets. The German DAX is up by 0.3%, the French CAC 40 has risen by 0.4%, and the FTSE 100 has increased by 0.1%.