JD Sports warns over profit hit after October trading woes
The retailer said underlying annual profits are now expected at the lower end of its previous guidance for between £955 million to £1.04 billion.
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Your support makes all the difference.Retailer JD Sports Fashion has seen shares tumble after warning over a hit to profits following a sales slump in October.
Shares in the sportswear firm plunged as much as 17% in morning trading on Thursday after it said underlying annual profits are now expected at the lower end of its previous guidance for between £955 million to £1.04 billion.
It follows tough trading in October, with UK sales hit by mild weather and higher promotional discounts elsewhere in the sector, while JD Sports said North American sales were likely to have been affected by uncertainty ahead of the US election.
Like-for-like sales fell 2.4% in the UK overall in the three months to November 2, with US sales of 1.5%.
Same-store sales were 0.3% lower across the group in the quarter.
Regis Schultz, chief executive of JD Sports, said: “After a good start to the period, helped by strong back-to-school sales, we saw increased trading volatility in October, particularly in North America and the UK, reflecting elevated promotional activity and mild weather.”
“The trading environment remains volatile though and, following October trading, we now anticipate full year profit to be at the lower end of our guidance range,” he added.
The said it saw solid trading in August and September, but this was followed by “much softer consumer demand” in October.
Store sales continued to outperform online trading, while footwear also fared better than clothing, according to the group.
JD opened 79 new shops in the third quarter, with 181 in its financial year so far, taking the global total to 4,541.
This includes about 1,180 added from the £900 million acquisition of US retailer Hibbett.
Russ Mould, investment director at AJ Bell, added: “JD Sports had been on course to join UK retail’s exclusive £1 billion profit club but its latest update suggests it might just be left loitering on its fringes.”
He said the firm’s decision to hold off from joining rivals in widespread discounting may “pay off in the longer term”.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, added: “JD’s been reluctant to offer the same level of promotion as the competition, which has helped to protect its margins.
“But it’s also meant sales growth has slowed over the third quarter.”