JD Sports shares rise after profit guidance maintained despite sales drop

JD Sports Fashion has seen its shares climb following a smaller than expected decline in second quarter sales coupled with a pledge to uphold its annual profit guidance. The British retail group reported a 3 percent fall in like for like sales for the three months ending in August, attributed largely to weaker results in North America and challenging comparative figures in Europe and the UK. This period last year benefited from the boost of the Euros football tournament.

Despite these headwinds and the drag on performance in some regions, shares rose by 3.5 percent closing at 97.25p. The lukewarm sales figures proved less disastrous than analysts had predicted and the company reaffirmed its full year profit forecast of £885 million exclusive of the potential impact of US tariffs. JD Sports’ ongoing £100 million share buyback also helped buoy market sentiment.

Chief Executive Régis Schultz highlighted improved performance in North America especially in apparel and online sales attributed to delayed launches in the first quarter now bearing fruit. Peel Hunt analysts singled out the ‘eye catching’ uptick in apparel which now represents around 15 percent of group turnover. They also noted a return to basic retail logic as quality product still drives customer interest even in a volatile climate.

Schultz adopted a cautious outlook as shopper sentiment continues to show wariness. Consumers remain highly discerning with their spending despite overall macroeconomic resilience. Possible pressures ahead include continued economic uncertainty an evolving footwear market and the spectre of increased tariffs on US trade. JD Sports will issue a further trading update in its impending half year results set for 24 September.

Founded in 1981 in Greater Manchester the group now operates nearly 4900 stores across 36 countries. While JD Sports has historically generated the bulk of its profits in the latter half of the year seasonality and economic conditions remain key considerations. Although the retailer has grown its international footprint and continued to attract younger shoppers its share price is still down more than 30 percent over the past twelve months and remains far from its 2021 highs. Two profit warnings earlier this year shook investor confidence and have cast doubt on achieving the £1 billion profit milestone previously anticipated.

Market observers see JD Sports as maintaining growth momentum and expanding its global market share but with ongoing challenges. Competitive online pricing in the UK has boosted sales but applied pressure to gross margins. As the company works to convince the market of its turnaround plans investors and analysts alike will be monitoring profit delivery and consumer confidence in the coming quarters.