JD Sports: Retailer warns of ‘challenging’ trading, but sees brighter days ahead

It came despite a tough January when the business said it had to cope with “elevated promotional activity”.

The company “chose not to participate fully” in these sales in the UK and Ireland, which were mainly online. As a result like-for-like sales fell by 3.2 per cent in the region in the fourth quarter.

Régis Schultz, CEO of JD Sports Fashion Plc, said: "In our FY24 financial year, we outperformed the sportswear market, reflecting the strength of our business.

"We achieved like-for-like sales growth of over 4 per cent, organic growth of over 8 per cent and our athleisure fascias achieved organic growth of over 10 per cent.

"We made good strategic progress, opening 215 new JD stores, and focusing our effort on developing JD and enhancing EPS through taking full control of ISRG and MIG.

"We expect profit before tax for the year to be in line with the guided range given in January.

"Looking ahead, the current trading environment remains challenging due to less product innovation and elevated promotional activity, especially online.

"We anticipate trading conditions will improve as we move through the year, helped by a busy sporting summer and softer comparatives with last year.

"We continue to invest in our people and the infrastructure needed to deliver our long-term growth plan. I am excited about the opportunities for the JD Group going forward and our ability to deliver attractive returns to shareholders."

Julie Palmer, partner at Begbies Traynor, said the update from JD Sports provides further evidence that UK retailers are still battling against challenging macroeconomic conditions and cautious consumer spending.

She added: "The FTSE 100 giant is clearly not immune to the wider issues that are causing similar pressures for peers such as Footlocker and Nike, with like-for-like sales growth in Q4 (the fourth quarter) slowing to just 0.1 per cent.

“However, the strength of JD’s long-established brand, along with its loyal Gen Z and millennial customer base, puts it in a strong position for an eventual rebound in consumer spending.

"However, the retail stalwart will need to prove it can create more innovative product ranges if it is to attract more attention from its younger customer base.

“With inflation helpfully coming down from the peaks experienced last year, and the Bank of England looking increasingly likely to start cutting interest rates, the retail giant should start to feel less pressure on its margins and find a firmer footing in the near future.

“Investors should feel some reassurance that performance hasn’t deteriorated further since its January profit warning, though they will by no means expect trading to make a quick recovery, given Nike’s weak performance will likely have a knock-on effect for JD.

“Unfortunately, JD Sports’ profit target of £1bn doesn’t appear attainable just yet.

"For now, the retailer’s focus should be on navigating the current headwinds and eventually rebuilding its margins, which shouldn’t be too difficult for a company with an impressively strong brand and reach.”