JD Sports expects full year profit at lower end of guidance

JD Sports Fashion in its third quarter trading update said given the volatile trading environment, and following October trading, it now expects pre-tax profit to be at the lower end of original guidance range of 955 pounds to 1,035 million pounds.

The company said that the more volatile environment was reflected in like-for-like (LFL) sales for the period down 0.3 percent with a good August and September offset by a softer October.

At the end of the period, year-to-date LFL sales growth was 0.5 percent. On a LFL basis, stores continued to outperform online and footwear continued to outperform apparel in the period.

Commenting on the outlook, Régis Schultz, CEO of JD Sports Fashion said in a release: “The trading environment remains volatile though and, following October trading, we now anticipate full year profit to be at the lower end of our guidance range.”

JD Sports achieves growth amid tough trading conditions

Driven by the store rollout programme, organic sales growth in the period was 5.4 percent with year-to-date organic sales growth of 6.1 percent.

After a strong back-to-school period, the company saw much softer consumer demand and trading toward the end of the quarter, reflecting elevated promotional activity, unseasonable weather and a cautious consumer, with evidence supporting suppressed demand in the US ahead of the election.

The company’s gross margin for the period increased 0.3 percent pts to 48.1 percent with the year-to-date gross margin at 48.2 percent, in line with the corresponding period.

“After a good start to the period, helped by strong back-to-school sales, we saw increased trading volatility in October, particularly in North America and the UK, reflecting elevated promotional activity and mild weather,” added Schultz.

JD continues to expand footprint

The company added that all segments achieved organic sales growth in the period, driven by new space growth in JD and Complementary Concepts, and by LFL sales growth in Sporting Goods & Outdoor. Regionally, Europe performed well, delivering both LFL sales growth and organic sales growth, with softer trading in the period being seen elsewhere.

In the period, JD opened 79 new stores, taking the total number of openings by the end of the third quarter to 181. The total number of stores at the period end was 4,541, up 1,224 from the start of the year, including 1,179 stores acquired with Hibbett.