A worsening slide in North American trainer sales has forced the sportswear retailer to cut its full-year profit outlook, sending shares sharply lower.
JD Sports Fashion (LSE: JD) shares tumbled more than 9% on Thursday after the retailer slashed its full-year profit guidance, with its once-dominant North American business now its biggest drag on performance.
The group said full-year pre-tax profit before adjusting items is now expected to come in between £700m and £800m, down from a previous range of £750m to £850m, as a promotional and heavily discounted trading environment shows no sign of easing.
Organic group sales fell 1.3% in the 13 weeks to 1 August, with like-for-like sales down 3.1%, a slight deterioration on the previous quarter. North America, JD's largest market, saw organic sales drop 4.5%, hurt by softer consumer sentiment, a quieter run for sought-after 'high-heat' trainers and back-to-school spending shifting later into August. Footwear demand stayed weak across every region, though online sales rose 2.6% and apparel and accessories proved more resilient.
Not every region disappointed: the UK returned to modest like-for-like growth on the back of strong football replica kit sales and a stronger Outdoor division, Asia Pacific organic sales grew more than 10%, and Europe's trend edged higher against a still-cautious consumer backdrop. Analysts flagged that JD's troubles look partly product-driven, with weaker demand for ageing footwear lines compounding a tougher spending environment for shoppers.
Free cash flow guidance was left unchanged at £460m to £520m, and having swung to a net cash position, JD pressed ahead with its buyback programme, starting the second £100m tranche of its £200m annual scheme this month. Investors will now be watching whether the promotional pressure management has warned of persists into the second half, and whether North American demand can stabilise before the crucial festive trading period.
This report is based on JD Sports Fashion’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full results calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Drink Drippy on Unsplash.
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