JD Sports Share Price Plunged 20.5% on the Peak Season Update

The JD Sports Fashion PLC (LON: JD) share price plunged by 20.5% after sharing its trading performance for the peak season. Over the 22 weeks ending on 30 December 2023, the group reported a constant currency organic revenue increase of 6.0%, with a 1.8% rise in comparable sales. 

The above figures were modestly below the company's initial projections. The revenue growth in apparel was notably affected by unexpectedly warmer weather starting in late September. The overall market experienced a milder and more promotional peak trading season than expected, indicating a shift towards more prudent consumer spending.

The company now projects the year's organic revenue growth to be approximately 8%. The group's gross margin rate remained consistent with the previous year but fell short of expectations due to the increased promotional activities during the critical trading period.

Consequently, the expected gross margin rate for the entire year is marginally lower than the prior year. 

The fiscal year 2024 will further be influenced by a reclassification of certain capital expenses to operational costs, estimated at £7 million, along with a decreased interest income of £8 million following the ISRG NCI acquisition and costs related to maintaining dual infrastructure.

Looking ahead to the fiscal year ending on 3 February 2024, JD Sports predicts its pre-tax profit and adjusted items to range between £915 million and £935 million. As the financial year concludes, the company maintains a positive outlook on its inventory status. 

The annual results will be announced around the same time as the previous year, with the addition of working with new auditors.

Régis Schultz, CEO of JD Sports Fashion Plc, said: “We have made good progress against our five-year strategic plan, delivering global organic revenue growth of 6% in the period, against very tough comparisons with last year, and opening over 200 new JD stores in the year. Our key markets have seen increased promotional activity during the peak trading season, driven by a more cautious consumer, but we continue to grow market share. We are confident in our strategy, and we continue to invest in our supply chain, systems and stores, supported by our strong cash generation and healthy balance sheet.”

JD Sports share price. 

The JD Sports share price plunged 20.45% to trade at 123.42p from Wednesday’s closing price of 155.15p.