JD Sports Profit Forecast Lowered as Unemployment Rises and Consumer Confidence Weakens

JD Sports Fashion has alerted investors that its annual profit will likely reach the lower end of forecasts due to mounting youth unemployment and diminished sales volumes in trainers and tracksuits. The announcement resulted in a 2.71 per cent decline in the retailer’s share price, settling at 78p after a third quarter trading update revealed reduced sales. City analyst projections indicate a full year profit expectation of between £853 million and £888 million.

Chief Executive Régis Schultz commented that the group remains attuned to the persistently challenging macroeconomic environment and its effects on consumer behaviour in strategic markets. He noted that the company’s primary customer base, which is predominantly youthful, faces particular pressure from rising unemployment and uncertain consumer sentiment. Official figures from the Office for National Statistics show a marginal reduction in the number of 16 to 24 year olds not in employment, education, or training, but Schultz maintains concern as the unemployment trend appears to be reversing, especially among younger demographics.

Schultz previously cautioned Chancellor Rachel Reeves against further increases to employment costs, arguing that higher staff expenses would erode UK competitiveness and limit discretionary spending for younger consumers. JD Sports, the nation’s largest retailer of branded sportswear, has encountered volatility since the pandemic-era surge in athleisure demand. Ongoing caution among consumers, supply challenges with partner brands such as Nike, and broader economic uncertainty have weighed on the company’s performance; shares are down 30 per cent over the past 12 months.

Like for like sales at JD Sports dropped by 1.7 per cent in the thirteen weeks leading up to 1 November, though acquisitions pushed this figure to an 8.1 per cent increase. Across the first nine months of the financial year, total like for like sales declined 2.2 per cent, while cumulative sales rose 15.7 per cent. North America, responsible for nearly 40 per cent of the group’s turnover, showed some improvement compared to the second quarter, but still posted a 1.7 per cent decline in like for like sales. When excluding Finish Line, a business being gradually rebranded as JD, US like for like sales slipped only 0.2 per cent. Sales decreased by 1.1 per cent in Europe and by 3.3 per cent in the UK, though both metrics represented slight improvements from the previous quarter.

The group’s gross profit margin fell by 30 basis points year on year, not including the impact of acquisitions, primarily due to online price promotions. Across the entire group, margins dropped 40 basis points. Schultz acknowledged that repositioning JD Sports is taking longer than expected, but he remained firm that the group is advancing its strategic objectives, maintaining operational and financial discipline, and demonstrating agility in response to shifting consumer patterns.

Analysts from Peel Hunt suggested that a revival in economic confidence and compelling new product releases could fortify JD Sports’s outlook, though these factors may not materialise imminently. David Hughes of Shore Capital observed persistent weakness in like for like trading across core markets over the past eighteen months, but noted gradual improvement in the United States. RBC Capital indicated opportunities exist for JD Sports to broaden its customer appeal across regions and enhance warehousing and online services, initiatives expected to create further margin improvements.