Sports fashion retailer JD Sports has issued a profit warning: the important holiday season was disappointing and annual profit will end 120 million euros lower than expected.
Too many discounts
In the 22 weeks ending 30 December, JD Sports only achieved a 6 % increase in sales and even a 1.8 % increase on a like-for-like basis. That was worse than expected, the company admits. Sales were hampered by the mild autumn weather, while year-end sales earned less due to higher discounts. For the full year, the sports chain is now counting on an organic sales growth of 8 %.
Gross margin is also slightly lower due to the many promotional actions. The company is significantly downgrading its profit forecast: it will be more than 100 million pounds lower, at 915 to 935 million pounds (1 to 1.1 billion euros) before tax.
However CEO Régis Schultz says he does see some positive points, such as the lower stocks and the “good progress against its five-year strategic plan”, opening more than 200 shops last year. Schultz also sees his chain “increasing our market share”. Other fashion chains also complained about the weather and bargain-seeking consumers this autumn: Nike even announced a round of layoffs, hinting that the golden age for sports brands is out.
