JD Sports grapples with ‘tough’ consumer backdrop as sales weaken
JD Sports Fashion has blamed cost-of-living pressures for weighing on demand among its younger customers as it reported weaker sales and profits.
The sportswear chain said it was operating against a “tough global consumer backdrop” which was particularly prominent among US shoppers.
Sales came in at £5.9 billion for the six months to August 1, which was about 0.7% less than the same period a year ago.
This was driven by a 1.7% decline in North America, its biggest market, and a 1.6% fall in the UK – partly offset by sales jumping by more than a 10th in the Asia Pacific region.
The company also revealed its pre-tax profit, adjusted for one-off items, tumbled by a fifth to £282 million.
JD Sports has flagged weaknesses in the footwear market with fewer big launches from its brand partners coupled with lower confidence to spend among its core demographic of customers, typically aged between 16 and 24.
The firm has previously cautioned over higher inflation eating into consumer budgets, particularly from higher fuel prices.
However, it highlighted good momentum for running trainers and clothing and newer styles of shoes.
Chief executive Regis Schultz said the retailer had showed a “resilient performance against a challenging backdrop of consumer cost-of-living pressures, footwear product cycle headwinds and a highly promotional market”.
JD Sports cut its profit outlook last month, saying it was expecting pre-tax profits for the full year to be between £700 million and £800 million, down from a previously guided range of £750 million to £850 million.
It had 4,766 stores worldwide in August – meaning its chain of shops has been reduced by more than 100 since the same time last year.
Victoria Scholar, head of investment at Interactive Investor, said: “The struggles at Nike also have a knock-on effect on JD Sports as one of its most significant brand partners.
“The sportswear giant has fallen out of fashion amid fickle consumers who no longer see Nike products as highly desirable.
“Preferences have shifted towards newer, more exciting, nimble brands like On and Hoka, hurting the longstanding market leaders.”