It was a slower quarter for “high-heat footwear product”, said JD Sports. It didn’t mean it was struggling to shift sandals during a heatwave. Rather, it was referring coyly to the big global trainer brands’ failure to come up with hot new designs. When Nike and Adidas, reckoned by City analysts to account for slightly more than half JD’s sales, are on tepid form, the self-styled “king of trainers” retailer usually is as well.
The low-heat grumble will be familiar to JD’s shareholders. So, too, the one about “incremental cost of living pressures”, especially in the US. And the phrase “a promotional market” has appeared so often in the company’s updates in the past couple of years that it would be easier to tell us when discounting isn’t dominant.
The result was another warning on profits and a 14% slump in the share price. JD now thinks it’ll make between £700m and £800m at an underlying pre-tax level this financial year. The difference from the previous estimate of £750m-£850m isn’t huge, but they all count. This was the third warning since early 2024. The particular disappointment this time is that it was a men’s football World Cup year, which ought to have been good for generating a general sporty buzz for a global business.
The market clearly is genuinely weak. Nike’s share price is down a third this year even after a miserable performance in the last two. Or look at Adidas’s own recent warning that its big marketing bet on the World Cup didn’t pay off. Or at the sluggish spending among US consumers in response to higher energy prices: Walmart, the largest US retailer, this week reported its slowest sales growth in six years.
Even so, the deeper worry at JD is that the whole “athleisure” trend isn’t coming back – or, if it does, at nothing like the level of the old days. The Covid pandemic created a mini-boom for joggers and trainers but since then the direction has only been one way. Did Nike and Adidas push prices too far? Have they been outflanked by the likes of Hoka and On? Or have consumer tastes just changed? Probably all of the above to an extent – and none is good news for JD.
The cashflow forecast, for £460m-£520m, didn’t change, which is evidence to support JD’s boasts about sharpening internal controls after its previous boom years of successful global expansion in the 2010s. All the same, waiting for an upturn, counting the cashflow and buying back a few shares makes for an uninspiring life.
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Disagreements about strategy reportedly led to the exit of the chair, Andrew Higginson, last month, and it is easy to see why there would be tension. The share price is back at 2019 levels. If this were a conventionally owned public company, as opposed to one with a 55% shareholder in the form of the Pentland Group, the chief executive Régis Schultz might be under more pressure to generate some trading heat via self-help. Non-Pentland shareholders are surely frustrated.
