Shares of British sports fashion retailer JD Sports Fashion Plc (GB:JD) are down 19.6% at the time of writing following a profit warning for the full year 2024 ending February 3. Shares hit a fresh 52-week low of 123.40p as of the last check. The FTSE 100-listed company slashed its full-year profit before tax and adjusted items guidance to the range of £915 million to £935 million. JD Sports had earlier expected the number to exceed £1 billion. Also, the full-year organic revenue growth is now pegged at 8%.
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JD Sports Fashion Plc is a U.K.-based retailer of branded sportswear and fashionwear. The retailer’s offering includes international brands, such as Nike, Adidas, and The North Face, and own-brand labels, such as McKenzie, Carbrini, Supply & Demand, and The Duffer of St George. JD has stores across the U.K., mainland Europe, and outside of Europe. JD shares have gained 15.7% over the past year.
Factors Impacting JD’s Profit Outlook
JD Sports noted that a lull in demand for clothing was affected by a milder Autumn from the second half of September. At the same time, Christmas sales did not pick the pace as expected, as customers reeled through macroeconomic challenges. Also, the company spent heaps on promotional activities through the peak trading season and did not reap sufficient sales, thus impacting the bottom line.
For the 22 weeks ending December 30, JD’s constant currency organic revenue growth hit 6%, while like-for-like growth was only 1.8% and below its expectations. Meanwhile, the company’s gross margin came in similar to last year and was weaker than expected, as promotional expenses took a toll on the finances. JD Sports is scheduled to report its Q4 Fiscal 2024 results on April 16, 2024.
Despite the odds, JD Sports CEO Régis Schultz noted that the retailer is on track to achieve its five-year strategic plan and grow its market share. The company will continue to spend on its supply chain, system, and stores, backed by solid cash flow generation and a robust balance sheet.
Is JD Sports a Buy or Sell?
Following the profit warning, Citi analyst Monique Pollard retained a Buy rating on JD stock without assigning a price target. Other analysts might also revisit their ratings following the update.
With three unanimous Buy ratings received in the past three months, JD stock has a Strong Buy consensus rating. On TipRanks, the JD Sports Fashion Plc share price forecast of 198.00p implies 58.1% upside potential from current levels.
