JD Sports has reported a slowdown in sales growth and warned that full-year profits will come in at the lower end of market expectations.
In its trading update for the 13 weeks to 1 November, the sportswear giant posted an 8.1% rise in total sales at constant currency, boosted by acquisitions. However, like-for-like sales fell 1.7%, with organic growth of just 2.4%, reflecting fragile demand in both the UK and the USA. JD Sports now expects profit before tax and adjusting items for the year to be at the lower end of analyst forecasts (£853m-£888m), compared to £923m last year. The retailer cited "weaker macroeconomic conditions" and "margin pressure from promotions" as key factors behind the downgrade.
Headwinds
One of the UK's largest listed retailers, JD Sports is facing several headwinds at the moment - not least that, like many footwear and apparel retailers across Europe and the USA, it is struggling with increased labour costs and consumer volatility. Its core demographic is 16-24-year-olds, and with youth unemployment surging - almost one million young people in the UK are now NEET (not in education, employment or training), up from 740,000 in 2022 - demand for premium-branded clothing, including sports apparel and trainers, has dropped.
Dovetailing with this is the fact that JD Sports is heavily dependent on premium sportswear brands, including Nike, which accounts for roughly 45% of its sales. Nike has had problems of its own in the last two years - it's still worth around $95 billion, nearly three times the value of its closest rival Adidas, but its share price has more than halved from 2021 highs. One reason for this is that the public has fallen out of love with the basketball and retro shoe silhouettes that have dominated its trainer sales in recent years - and this has had a knock-on effect on JD Sports' own sales. Nike's new CEO, Elliot Hill, has grand plans to turn the company's fortunes around with new high-performance running and walking shoes - but in the meantime, with JD Sports' fortunes so closely tied to Nike, the British retailer is feeling the impact of the American sportswear giant's downturn.
Operational changes
To ease margin pressures, JD Sports is implementing operational changes, including £30 million in group-wide cost savings and a rationalisation of its store portfolio, with 13 UK stores already closed. However, it is also pressing ahead with strategic initiatives. It is accelerating its digital transformation with a new ecommerce platform rollout across Europe, enhanced mobile experiences, and AI-driven merchandising tools to boost personalisation and conversion. The retailer is deepening omnichannel integration through initiatives like ship-from-store fulfilment and its rapidly growing JD Status loyalty app, which now includes exclusive Nike benefits. Supply chain automation at its Heerlen distribution centre underpins these efforts, ensuring faster, more efficient delivery.
Commenting on JD Sports' Q3 results, investment bank Peel Hunt highlighted that the retailer is mainly doing all the right things. "JD's 3Q was a small beat versus VA consensus," they said in their morning note, "But macro conditions appear to be worsening and Nike's recovery has yet to materialise. We downgrade our PBT forecasts for FY26E, FY27E and FY28E by 4-7%. In our view, JD is doing little wrong. It remains the store of choice for the sports fashion consumer and the partner of choice for global brands. We believe the long-term global strategy is also the right one, but the sector cannot catch a break at present."
With Christmas trading looming, JD faces a critical test to balance competitiveness with profitability in an increasingly promotional market.
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