JD Sports cuts profit outlook as US sales drop, shares tumble

On August 20, British sportswear and fashion retailer JD Sports revised its profit outlook downwards after experiencing a decline in second-quarter sales in its primary North American market, causing its shares to plummet. With over a third of its sales generated in North America, JD's stock dropped by 12 percent in early trading, after reporting a 3.1 percent decrease in like-for-like sales over the 13 weeks ending August 1, compared to a 2.5 percent drop in its first quarter.

The decline was more pronounced in North America, where shares fell by 6.8 percent, while they decreased by 2.7 percent in Europe. Conversely, JD's shares increased by 0.8 percent in Britain and 1.4 percent in the Asia-Pacific region.

JD attributed its North American performance to weaker consumer sentiment, slower sales of high-heat footwear products, and deferred back-to-school demand that shifted from July into the initial weeks of August. The company also noted the ongoing challenge in the footwear category, citing "ongoing product cycle evolution" and pressure on consumers. JD emphasized that the apparel and accessories segment performed well across all regions, with strong sales of football replica kits in Britain.

The retailer disclosed that it has witnessed a nearly 30 percent reduction in its stock market value over the past two years, attributable to pressure on its core younger and less affluent customer base, driven by promotions and a lack of innovation from Nike, which accounts for more than 40 percent of group sales. JD now forecasts a full-year 2026/27 profit before tax and adjusting items between £700 million (S$1.2 billion) and £800 million, a range that differs from its previous guidance of £750 million to £850 million and the £852 million generated in 2025/26. Prior to this update, analysts had averaged a forecast of £781 million.

CEO Regis Schultz stated, "Our guidance reflects a pragmatic view of external market conditions." However, Investec analyst Kate Calvert suggested that JD shares are unlikely to perform well until downgrades cease, excess inventory is cleared, and improved Nike momentum is observed, which analysts believe will not occur until the next calendar year.