British sportswear retailer JD Sports Fashion on Thursday cut its full-year profit forecast as rising costs and weak consumer spending hurt demand during the peak season. UK retailers have seen slow growth as inflation leads consumers to cut spending. On the London Stock Exchange, shares of JD Sports Fashion PLC plummeted 22.10% at 09:15 GMT. They were followed by sports equipment manufacturers Adidas (-3%) and Puma (-3%).
Weaker demand and higher-than-expected promotional activity also reduced gross margins during the peak season, which lasts 22 weeks until Dec. 30, JD said. The gross margin rate for the full year will be slightly lower than last year.
JD claims to have grown its market share
Apparel revenue growth was also affected by milder weather conditions, according to the group. The company, which sells, among others, the Nike and Adidas brands, now forecasts a profit before tax and adjusted items of between 915 and 935 million pounds (between 1,060 and 1,080 million euros) for the year ending on 3 December. February. The group and analysts had previously forecast an annual profit of around £1.04bn.
For the 22 weeks ending December 30, JD Sports says its comparable organic revenue rose 1.8%, slightly less than expected. The UK’s largest sportswear retailer expects organic revenue growth of around 8% for the full year. “Our key markets experienced an increase in promotional activity during the peak season, due to a more cautious consumer, but we continued to increase our market share,” CEO Régis Schultz said in a statement.
Nike predicts savings of two billion in three years
In late December, Nike lowered its annual revenue forecast due to consumer caution, weaker online activity and more
large number of promotions. The sports clothing and equipment group announced that it had achieved savings of up to two billion dollars in three years, thanks to greater automation, a review of its ranges and a reduction in its workforce, the magnitude of which it did not specify. “We see an exceptional opportunity to generate long-term profitability growth,” said Nike CEO John Donahoe, quoted in the press release.
On the occasion of the publication of its results corresponding to the second quarter of its staggered fiscal year, the American group specified, in a press release, that the majority of these savings would be “invested to finance future growth, accelerate innovation in pace and scale “. and generate superior long-term profitability.” The implementation of this cost reduction program is expected to result in a pre-tax charge of approximately $400 million to $450 million, much of which will be included in third quarter results. It will be mainly about severance pay, he simply indicated.
In the second quarter, ended November 30, Nike achieved revenue of $13.39 billion (+1%) and net profit of $1.58 billion, a jump of 19% year-over-year.
Source: BFM TV
