More than £1.7bn was wiped off the value of JD Sports on Thursday morning after the fashion retailer issued a profit warning saying that mild weather and heavy discounting had affected sales before Christmas.
Shares in the retail group, which owns Go Outdoors, Blacks, Millets and Size? as well as the JD chain, dived by 22% to 122p to their lowest in a year, making it the biggest faller in the FTSE 100, after the company said it did not expect to make more than £935m in annual profits, 10% below its previous guidance.
Shares in Sports Direct owner Frasers Group were also dragged down by more than 4% on fears that the sportswear market had been tougher than hoped after Nike warned of poor sales before Christmas. Shares in other retailers selling clothing, including Marks & Spencer and N Brown Group, also took a hit.
Régis Schultz, who became chief executive of the JD Sports Fashion group in September 2022, said: “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.”
Analysts at Peel Hunt said that trading and profit margins had fallen below hopes in all JD’s territories and that underlying sales had fallen in the UK where a hoped for “late surge in demand did not really emerge”.
Jonathan Pritchard, retail analyst at Peel Hunt said: “External factors are mostly to blame here. The consumer is cautious and looking for a deal and with no especially exciting [sports fashion product] launches, it has been a dullish period.”
The poor figures from JD came after Nike said last month that sales for the year were likely to rise by only 1%, a more pessimistic view than its previous forecast of mid-single-digit percentage growth.
The bestselling sportswear brand said it was cutting jobs and simplifying product ranges to concentrate on newer launches, which are proving more profitable than old favourites.
The profit warning by JD raises fears about a tough Christmas for fashion retailers after mild weather meant many people held off buying coats and knitwear.
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Simon Wolfson, head of the fashion and homeware chain Next, which reported stronger than expected sales on Thursday, told the Guardian: “It didn’t feel to us there was a huge amount more discounting”, but JD said there had been more than expected – suggesting different parts of the market may have been particularly vulnerable to heavy competition.
