More than £1.8bn has been wiped off the value of JD Sports after the fashion retailer issued a profit warning, citing mild weather and heavy discounting that hurt pre-Christmas sales. Shares in the group, which owns Go Outdoors, Blacks, Millets and Size? as well as the JD chain, dived by 23% on Thursday, making it the biggest faller in the FTSE 100.
The company now expects annual profits of no more than £935m, 10% below its previous guidance. The share price fell to just below 120p, its lowest level in a year. The warning also affected other retailers, with Frasers Group losing more than 3% and shares in Marks & Spencer and N Brown Group also taking a hit.
Analysts at Peel Hunt said trading and profit margins had fallen below hopes in all of JD’s territories, and underlying sales had fallen in the UK, where a hoped-for “late surge” in demand did not materialise. Retail analyst Jonathan Pritchard blamed external factors, including cautious consumers looking for deals and a lack of exciting product launches.
The sportswear market has faced broader challenges, with Nike warning of poor sales before Christmas and Adidas reporting falling sales in November. Alice Price of GlobalData noted that JD’s focus on fashion rather than technical goods made it more vulnerable to shoppers cutting discretionary spending. She added that middle-market brands like Nike were under pressure as consumers traded up to premium brands or down to high street own-labels.
Despite the setback, JD Sports CEO Régis Schultz expressed confidence in the company’s strategy, stating: “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. We are confident in our strategy and we continue to invest in our supply chain, systems and stores.”
