JD Sports Fashion has blamed cost-of-living pressures and weaker consumer confidence among younger shoppers for a deterioration in sales and profits, as the sportswear retailer warned of a “tough global consumer backdrop”.
The group reported sales of £5.9 billion for the six months to August 1, down about 0.7% from the same period last year.
The decline was led by North America, JD Sports’ largest market, where sales fell 1.7%. UK sales dropped 1.6%, while growth of more than 10% across the Asia-Pacific region provided some offset.
Adjusted pre-tax profit fell by a fifth to £282 million, underlining the pressure facing the retailer as consumers become more cautious about discretionary spending.
JD Sports said weaker demand was particularly evident among its core demographic of customers aged between 16 and 24. The group has also highlighted weakness across the footwear market, with fewer major product launches from brand partners and reduced confidence among younger consumers.
The company has previously warned that higher inflation, including rising fuel costs, was putting pressure on household budgets.
However, JD Sports said there were signs of strength in running trainers, clothing and newer footwear styles.
Chief executive Regis Schultz said the retailer had delivered a “resilient performance against a challenging backdrop of consumer cost-of-living pressures, footwear product cycle headwinds and a highly promotional market”.
The group cut its full-year profit guidance last month, forecasting adjusted pre-tax profit of between £700 million and £800 million, compared with a previous range of £750 million to £850 million.
JD Sports had 4,766 stores worldwide in August, more than 100 fewer than a year earlier, as the company continues to adjust its retail estate.
Analysts said the retailer was also being affected by changing consumer tastes and difficulties facing some of its major brand partners, particularly Nike.
Victoria Scholar, head of investment at Interactive Investor, said: “The struggles at Nike also have a knock-on effect on JD Sports as one of its most significant brand partners.
“The sportswear giant has fallen out of fashion amid fickle consumers who no longer see Nike products as highly desirable.
“Preferences have shifted towards newer, more exciting, nimble brands like On and Hoka, hurting the longstanding market leaders.”
The results highlight the challenge facing JD Sports as it attempts to maintain growth in a highly promotional market while its younger customers contend with squeezed disposable incomes.
At the same time, changing preferences in sportswear are forcing retailers and brands to compete for consumers increasingly attracted to newer labels and product launches.
For JD Sports, the combination of weaker demand, fewer major footwear launches and pressure on household budgets has made the second half of the year more dependent on a recovery in consumer confidence and momentum in newer product categories.
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