JD Sports said the period faced challenges, including milder weather and higher-than-expected levels of discounting impacting apparel revenue growth from September onward.
Consequently, the full-year gross margin rate is projected to be slightly lower than the previous year.
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The company said it did not expect to make more than £935m in profits, 10% below its previous guidance of £1.04bn.
The announcement follows a similar warning from Nike last month who said it plans to cut $2bn in costs over the next three years as a result of declining consumer demand, particularly in China and Europe.
JD Sport’s overall market experienced a softer and more promotional peak trading season than anticipated, reflecting cautious consumer spending.
Despite these challenges, the retailer expects full-year organic revenue growth to be approximately 8% and estimates the profit before tax and adjusted items for the full year ending 3 February 2024 to be in the range of £915m to £935m.
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By GlobalDataRégis Schultz, CEO of JD Sports said: “We have made good progress against our five-year strategic plan, delivering global organic revenue growth of 6% in the period, against very tough comparisons with last year, and opening over 200 new JD stores in the 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.”
Looking ahead, JD Sports said it remains “comfortable” with its current inventory position.
Commenting on the update, Alice Price, apparel analyst at GlobalData, said: “JD Sports has become the latest sportswear player to be hit by ongoing inflationary challenges, with constant currency global organic revenue in the 22 weeks to 30 December 2023 growing by only 6.0%—a marked softening from the 12% growth it reported in H1 FY2023/24 (ending 29 July 2023). Like-for-like growth was also behind expectations which JD Sports attributes to milder weather inhibiting initial demand for autumn/winter ranges, alongside greater promotional activity across the market as consumer confidence remains dampened, generating fiercer competition.”
“This [profit warning], alongside its slowdown in sales after a few tremendous years of growth, has spooked investors, with the JD Sports’ share price down c.20% in early morning trade. It follows wider challenges within the sportswear market, with even leading brand NIKE producing disappointing results for its Q2 FY2023/24 to the end of November 2023, with global revenue up just 0.5%. However, GlobalData forecasts that between 2023 and 2027, the global sportswear market will still outperform total apparel, growing at CAGR’s of 6.4% and 5.2% respectively, thanks to its comfort and versatility, as well as ongoing consumer focus on health and fitness, and JD Sports has a superior proposition that should see it regain strong demand once economic pressures subside.”
