JD Sports delivers profit warning as peak trading underwhelms

4th Jan 2024 07:13

(Sharecast News) - Sports fashion retailer JD Sports on Thursday delivered a profit warning after second-half trading missed expectations due to milder autumn weather and heavier discounting over the peak holiday shopping season.

The company said the "elevated level of promotional activity" during the peak trading period means that full-year gross margins would be slightly lower than last year, leading it to lower it adjusted pre-tax profit guidance for the 12 months to 3 February to £915-935m, from £1.04bn at the half-year stage.

Constant currency organic revenue growth was just 6% in the 22 weeks to 30 December, down from 12% in the first half. For the full year, organic revenue growth is expected to come in at 8%.

"Apparel revenue growth was impacted by milder weather from the second half of September, while the peak trading season, across the market, was softer and more promotional than we anticipated, reflecting more cautious consumer spending," the company explained.

Also impacting the bottom line is a reclassification of certain capital expenditures into operating expenses, expected to be £7m, and lower interest income of £8m following last year's acquisition of Iberian Sports Retail Group, as well as previously announced "dual running infrastructure costs".

Chief executive Régis Schultz said the company made "good progress" over the year but faced "very tough comparisons" with the previous year.

"Our key markets have seen increased promotional activity during the peak trading season, driven by a more cautious consumer, but we continue to grow market share. We are confident in our strategy and we continue to invest in our supply chain, systems and stores, supported by our strong cash generation and healthy balance sheet."