JD Sports cuts full year profit outlook after Q2 sales slump
JD Sports has lowered its full year profit outlook after posting a slump in second quarter sales in key markets.
The retailer now expects pre-tax profit before adjusting items to come in at between £700 million and £800 million, compared to a previous guidance of £750 million to £850 million.
In the 13 weeks to 1 August, organic sales fell by 1.3%, while like-for-like sales dropped by 3.1%. This compares to respective declines of 0.1% and 2.5% in its first quarter.
Subscribe to TRBJD Sports said footwear sales remained soft in the period, although there was a good performance in apparel and accessories across all regions.
Store footfall was generally lower year-on-year. However, online sales grew by 2.6%, supported by the strength of JD Sports’ apparel proposition and growth in store-based fulfilment.
Looking at the retailer’s geographical markets, North America posted a 4.5% decline in organic sales and a 6.8% fall in like-for-likes. JD Sports said this was the result of weaker consumer confidence, a slower quarter for high-heat footwear product, and deferred back-to-school demand shifting from July into the first half of August.
The retailer’s UK business fared better, with organic sales slipping by 0.2% and like-for-like sales edging up 0.8%. The performance was driven by apparel and accessories, including strong football replica kit sales, and an improvement in its outdoor business.
Meanwhile, organic and like-for-like sales in Europe declined by 0.4% and 2.7% respectively. Asia Pacific was the strongest-performing region, with organic sales up 10.2% and like-for-like sales rising by 1.4%.
Régis Schultz, chief executive of JD Sports Fashion, said trading in the second quarter was tough, with the market staying highly promotional.
Looking ahead, he said: “We continue to exercise strong cost and capital discipline across discretionary spend, store operating costs, inventory and capex, while also driving further supply chain efficiencies, including automation at our distribution centre in Europe.
“Our guidance reflects a pragmatic view of external market conditions, whilst our cost and capital discipline, coupled with the highly cash-generative nature of our model, keep us on track to deliver unchanged free cash flow of £460m to £520m. We remain confident in our long-term strategy and my thanks go to our colleagues worldwide for their continued hard work and focus.”
