JD Sports hit as wary customers flock to sale prices
The company downgraded its profit forecast by more than £100 million after a disappointing Christmas.
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Your support makes all the difference.Trainer seller JD Sports struggled to tempt wary customers even during the all-important Christmas period, forcing it to downgrade the amount of profit it expects to make this year.
Share in the retailer plummeted after it warned it would pocket more than £100 million less than previously thought in part to what it called “increased promotional activity” across the sector.
It said the “peak trading season”, industry jargon for Christmas, was softer and had more promotions than bosses had anticipated.
It did not directly say whether some of these special offers had been available in JD stores or whether it was just rivals who were taking business away from it.
However, the company said revenue grew 6% organically when accounting for moving exchange rates in the last 22 weeks of the calendar year.
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
“This was slightly below our expectations,” JD said.
Customers were cautious, having been hit by soaring inflation over the last two years, which has left many with less money in their pockets.
Shares had plunged by 22% on Thursday morning.
“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,” said chief executive Regis Schultz.
The business said it had also been hit by milder weather from the second half of September onwards.
Pre-tax profit is now expected to be £915 million to £935 million in the year to early February, down from previous expectations of £1.04 billion.
“We have made good progress against our five-year strategic plan, delivering global organic revenue growth of 6% in the period, against very tough comparisons with last year, and opening over 200 new JD stores in the year,” Mr Schultz said.
“We are confident in our strategy and we continue to invest in our supply chain, systems and stores, supported by our strong cash generation and healthy balance sheet.”