JD Sports' shares dropped significantly after the company issued its second profit warning in three months, attributing the downgrade to a slump in U.S. sales and waning consumer demand for trainers.
In the 13 weeks leading up to August 1, the retailer reported a 3.1% decrease in sales. The company stated that trading throughout the summer remained challenging due to what it described as "incremental cost-of-living pressures" on consumers and a highly promotional market requiring significant discounting in the footwear and sportswear sector.
The company's profit forecast for the fiscal year ending in January has been revised downward to between £700 million and £800 million, from a previous expectation of £750 million to £850 million. This marks a stark contrast to the company's past ambitions of joining the "£1 billion profits club."
JD Sports indicated that its performance was also affected by the struggles of its major supplier, Nike, which has faced increased competition from emerging brands like On and Hoka. Chief Executive Régis Schultz noted that North America experienced the most acute impact, compounded by a slower release of popular footwear products and the timing of back-to-school demand.
In contrast, sales in the UK saw a modest increase of 0.8%, boosted by strong performance from football replica kits during the World Cup. However, analysts pointed to broader economic factors, such as rising energy costs, affecting lower-income shoppers, particularly within the younger demographic that constitutes a core customer base for JD Sports.
The company also recently navigated a boardroom challenge, with Peter Agnefjäll, former head of Ikea, set to become its new chairman starting in September. He will succeed interim chairman Darren Shapland, who took on the role in April following an unsuccessful attempt by then-chairman Andy Higginson to remove CEO Schultz, reportedly due to declining sales and slow progress in North America.