JD Sports Fashion showed on Thursday how even the strongest companies can face tough times with an update for the 53 weeks to 3 February (FY24) showing tepid sales growth in some areas, and especially in Q4. 

Total sales were £10.5 billion, up 3.6% on the previous year, although this included a negative 6.2% impact from disposals but a 1.4% benefit from the 53rd week. Profit before tax for the year is expected to be in line with its revised guidance range of £915 million-£935 million.

Gross margin for the group ended the year at 47.3%, down 50 basis points on the previous year, due mainly to a higher mix of sales from Europe and North America, where margins were impacted by that more marked promotional activity in those markets. 

As for FY25, trading since the start of the new financial year has been as expected. “The market remains challenging due to less product innovation and elevated promotional activity in key markets, particularly online”, we’re told. It anticipates trading conditions will improve as it moves through the year, “helped by a busy sporting summer, softer comparatives with last year from Q2 and an improving product pipeline towards the end of the year”.

Given this, Q1 is likely to be the softest like-for-like (LFL) period of the year and H2 is likely to be stronger than H1. But cost inflation remains elevated, particularly labour.

So it expects LFL sales growth of between 1% and 4% with organic sales growth of between 6% and 9%. Profit before accounting changes should be £900 million-£980 million and after accounting changes should be £955 million-£1.035 billion.

Looking back at FY24, full-year organic sales rose 8.4% and on an LFL basis they rose 4.2%. In the UK and Ireland, full-year organic sales rose 1.5% and LFL sales rose just 0.8%. 

Those two figures for the rest of Europe were better with a 15.3% rise and 7.7% rise, respectively. In North America it was 9.3% and 4.1% and in Asia Pacific it was 17.7% and 11.8%.

In Q4 group sales rose 4.4% organic and just 0.1% LFL. In the UK and Ireland, those two figures were both negative to the tune of 2.5% and 3.2%, respectively. There were two drivers of this. The region has the highest apparel sales mix in the group and apparel performance was weaker than footwear. And it chose not to participate fully in the significant, mainly online, promotional activity within the UK in Q4. 

In Europe, they were positive at 8.9% organic and 0.9% LFL. Within the JD brand, stronger trading in Southern Europe, driven by Portugal and Italy, was offset partially by weaker trading in Northern Europe. This in part was due to a higher apparel mix in the north. The impact of new store openings across Europe helped deliver that Q4 organic growth of 8.9%.

In North America they were up 7.7% and 2.1% against a previous year comparative of over 30% growth, in what was a highly promotional market. New store openings were what drove that organic sales growth to 7.7%. 

In Asia Pacific they rose 12.3% organic and 8.3% LFL with contributions from all main markets and particularly strong growth in New Zealand and Thailand. Again, new store openings delivered that Q4 organic growth.

The company talked of elevated promotional activity in the market, particularly online, and tough comparisons in January. 

But it’s still expanding its store count at pace and opened 215 new JD locations in the year, while the launch of its new JD Status loyalty programme in the UK has been very encouraging to date with 800k downloads so far.

CEO Régis Schultz said: “In our FY24 financial year, we outperformed the sportswear market, reflecting the strength of our business. We achieved like-for-like sales growth of over 4%, organic growth of over 8% and our athleisure fascias achieved organic growth of over 10%. 

“We made good strategic progress, opening 215 new JD stores, and focusing our effort on developing JD and enhancing EPS through taking full control of ISRG and MIG.”