JD Sports Cites Cost-of-Living Pressures as Sales and Profits Decline

JD Sports has reported a decline in both sales and profits, attributing the downturn to the cost-of-living crisis impacting younger shoppers and a challenging global consumer environment, particularly in the United States.

For the six months ending August 1, the company's sales fell by 0.7 percent to £5.9 billion compared to the same period last year. Adjusted pre-tax profit saw a decrease of one-fifth, reaching £282 million.

The retailer previously warned about the impact of higher inflation on consumer budgets, exacerbated by rising fuel prices. JD Sports noted particular weakness in the footwear market, citing fewer major product launches from brand partners and reduced spending confidence among its core demographic of 16-to-24-year-old customers.

Despite these headwinds, the company highlighted positive momentum in sales of running trainers, apparel, and newer shoe styles. Chief executive Regis Schultz described the performance as resilient given the difficult economic conditions, product cycle challenges, and a highly promotional market.

In the previous month, JD Sports revised its full-year profit outlook downwards, now expecting pre-tax profits to be between £700 million and £800 million, a reduction from its earlier forecast of £750 million to £850 million. As of August, the company operated 4,766 stores worldwide, over 100 fewer than a year prior.

Industry analysts suggest that JD Sports' performance is also influenced by weaker sales trends affecting major sportswear giant Nike. Victoria Scholar, head of investment at Interactive Investor, commented that Nike's struggles have a ripple effect on JD Sports, a significant brand partner. She noted a shift in consumer preferences away from established brands like Nike towards newer, more dynamic brands such as On and Hoka, impacting market leaders.

Shares in JD Sports experienced a decline, falling 5.7 percent, or 4.5 pence, to 74.22 pence.