JD Sports shares plunge in London following a cut in guidance. North America is weighing on the share price

(Il Sole 24 Ore Radiocor) - JD Sports’ share price has plummeted on the London Stock Exchange after the company revised its full-year profit forecast downwards, following a disappointing second quarter performance, weighed down by the North American market. The British sportswear retailer, which generates around 40 per cent of its turnover in North America, announced that like-for-like sales across the group fell by 3.1 per cent in the 13 weeks ending 1 August, following a 2.5 per cent decline in the first quarter. On an organic basis, the decline was 1.3 per cent. In the first half of the financial year, revenue fell by 2.8 per cent on a like-for-like basis and by 0.7 per cent on an organic basis. Specifically, in the quarter, sales fell by 6.8 per cent on a comparable basis in North America and by 2.7 per cent in Europe, whilst they rose by 0.8 per cent in the United Kingdom and by 1.4 per cent in the Asia-Pacific region.

JD explained that the North American results reflect a decline in consumer confidence, a slowdown in footwear sales during the warmer periods of the quarter, and a shift in ‘back-to-school’ demand from July to the first half of August. The group also noted that, overall, the footwear segment remained stagnant, due to consumer pressure and what it described as ‘the ongoing evolution of the product life cycle’ amongst its main partner brands, and also highlighted a ‘highly promotional market’, characterised by numerous sales, “which is likely to continue into the second half of the year”. The clothing and accessories sectors, on the other hand, performed well across all regions.

‘The second quarter remained challenging. The market continued to be heavily promotion-driven, reflecting the difficulties our sector has faced in recent quarters in terms of consumer behaviour and the product life cycle for footwear, whilst our core consumer has been affected by the rising cost of living. North America felt the sharpest impact, partly due to a slower quarter for footwear and the timing of back-to-school demand. The UK had a good quarter, with strong sales of football kit replicas and improved performance in our Outdoor segment. “Performance in Europe improved slightly compared with the first quarter, in a still-weak environment, thanks to the resilience of the sports goods sector,” commented CEO Regis Schultz, quoted in a press release. “Our forecasts reflect a pragmatic view of external market conditions, whilst our discipline in terms of costs and capital, combined with the strong cash-generating capacity of our business model, enables us to remain on track to achieve free cash flow of between £460 million and £520 million. We remain confident in our long-term strategy’, added the CEO.

Given the situation in the first half of the year and the outlook for consumer spending, the group now expects a pre-tax profit, excluding exceptional items, of between 700 and 800 million pounds (815 to 930 million euros) for the full 2026–2027 financial year. The previous forecast was between £750 million and £850 million, compared with the £852 million recorded in 2025/26. Prior to the guidance update, analysts had expected an average of £781 million.

Over the past two years, JD’s share price has fallen by around a quarter, due in part to reduced spending power amongst its core customer base – comprising young people and those on low incomes – and a market dominated by promotions, but also because of a lack of innovation on the part of Nike – which is currently undergoing restructuring – and which accounts for around 45 per cent of JD’s turnover.