JD Sports, the sportswear retailer with 4,800 stores worldwide, has warned that its profits will fall this year amid a 'muted market' affected by the Middle East conflict and rising youth unemployment. The company expects profits between £750m and £850m in the year ahead, down from £852m reported in the year to the end of January.
Chief executive Régis Schultz said the core youth market had been hit by rising unemployment, noting that part-time contracts of 10-30 hours per week allowed young people to buy sneakers. Industry data showed sales to 14-18 year olds fell by more than 10% across Europe, including the UK.
While JD said there had been 'no material business impact to date' from the war in Iran, it warned the conflict could push up costs and prices over time, including energy and fuel costs across its store and logistics networks. However, Schultz stated the company had no intention of raising prices, saying 'the market and the consumer is not ready for price increases.'
JD reported flat sales in the three months to the end of April, following a 2.1% increase in the year to January to £12.66bn. The UK was the worst-performing market, with sales down 2.5%, offset by growth elsewhere in Europe and the US. Cold and wet weather since the end of the financial year also dampened sales.
Shares in JD rose almost 10% on Thursday, making them the biggest riser on the FTSE 100. The company plans to use more automation and AI to improve supply chain efficiency and will continue shifting towards fewer, larger stores in the UK.
