JD Sports has said consumers being squeezed by cost-of-living pressures such as higher fuel prices has dragged on its global sales, despite getting a boost with the demand for football kits in the UK.
The retail chain said it was downgrading its profit outlook in a “tough” market.
It reported a 3.1% decline in sales over the 13 weeks to August 1, compared like-for-like with the same period last year.
North America sees steepest decline
The decline was particularly pronounced in North America, its biggest market, where sales fell by 6.8% year-on-year.
JD Sports said pressure on consumer spending hit footwear sales, particularly for hotly anticipated launches or limited-edition trainers, and amid an increased level of discounting.
This was partially offset by increased demand for running shoes and newer footwear styles.
UK sales edge up on football kit demand
In the UK, sales edged up by 0.8% year-on-year, helped by stronger spending on outdoor-related products.
The firm also flagged a boost from football replica kit sales during the quarter while England and Scotland played in the group stages of the men’s football World Cup.
But across the first half of the year, JD Sports said weaker trading has reflected “incremental cost-of-living pressures on our core consumer from continued inflation including higher fuel prices”.
The retailer relies largely on non-essential spending by younger customers wanting the latest styles.
Profit outlook downgraded
JD Sports said it was now expecting its pre-tax profits for the full year to come in between £700 million and £800 million, down from a previously guided range of £750 million to £850 million.
The company’s share price dropped by about 14% on Thursday following the update.
Chief executive Regis Schultz, who has been driving the company’s turnaround, said: “Trading in the second quarter remained tough.
“The market stayed highly promotional, reflecting the consumer and footwear product cycle headwinds our industry has faced in recent quarters, whilst our core consumer was impacted by incremental cost-of-living pressures.
“North America saw the most acute impact, also reflecting a slower quarter for high-heat footwear product and the timing of back-to-school demand.
“The UK delivered a good quarter, with strong football replica kit sales and an improved performance in our outdoor business.”
Richard Hunter, head of markets at Interactive Investor, said: “Lower-income shoppers are under pressure due to rising energy costs and any cost-of-living demands on individual budgets, particularly in its core younger market.
“More positively, sportswear continues to take share within apparel due to rising participation in athletics, particularly among higher-income consumers who tend to have a greater propensity to spend regardless of the economic backdrop.”
