JD Sports, often referred to as the 'King of Trainers,' has issued a revised profit outlook for the full year 2026/27, lowering it to a range of £700 million to £800 million. This is a significant reduction from its earlier guidance of £750 million to £850 million and the £852 million reported in the previous fiscal year, 2025/26. This downgrade follows a challenging second quarter where like-for-like sales across the group fell by 3.1%, a steeper decline than the 2.5% drop seen in the first quarter, and nearly double the 1.7% slowdown forecast by Berenberg.
The primary driver of this profit warning is a substantial slump in sales within the key North American market, which accounts for over a third of JD Sports' total sales. Sales in North America declined by 6.8% in the second quarter. This was attributed to weaker consumer sentiment amid broader cost-of-living pressures, a slower period for 'high-heat' footwear products, and the deferral of 'back-to-school' demand from July into August. In contrast, the UK market saw a slight improvement, with sales inching up by 0.8% due to strong demand for replica football kits and outdoor wear, while Asia Pacific sales rose by 1.4%. Europe, however, experienced a 2.7% decline.
CEO Régis Schultz noted that the trading environment in the second quarter remained tough, characterized by a highly promotional market and headwinds in consumer spending and footwear product cycles. The company is facing increased competition as rivals resort to heavy discounting to attract price-sensitive shoppers. Investec analyst Kate Calvert commented that JD's shares are unlikely to recover until downgrades cease, excess inventory is cleared, and Nike, which accounts for over 40% of JD's sales, shows better momentum, which she anticipates won't happen until next calendar year. JD Sports' shares fell over 10% in early trading following the announcement, and its stock has shed approximately 30% of its value since Schultz took charge in 2022. Despite the profit cut, JD Sports still expects to deliver free cash flow of £460 million to £520 million.
