JD Sports plunged on Thursday after the sports and pleasure retailer said it would miss its profit guidance as promotional activity hit margins.
JD Sports shares were down 22% at the time of writing on Thursday.
“When one of the biggest names in retail issues a profit warning, you know life is hard for the sector,” said AJ Bell investment director Russ Mould.
Alongside Next, JD Sports is one of the first FTSE 350 retailers to report festive trading updates. JD Sports has previously defied economic concerns making today’s announcement even more concerning for investors.
The company had been targeting record pre-tax for the full of over £1 billion.
“News from JD Sports that full-year pre-tax profit will be up to 12% below the £1.04 billion guidance given last September has disappointed the market. Sales growth has been softer than expected and margins have been squeezed by high levels of promotional activity,” said Russ Mould.
“For JD, issuing a profit warning is a terrible start to the new year. It will put pressure on management to up their game and find innovative ways to shift more stock without sacrificing too much margin. Any interest rate cuts from the Bank of England will be a gift to the consumer and therefore to companies like JD, but there is no guarantee that will happen any time soon.”
JD Sport has traditionally been a retailing powerhouse and the strength of its brand and the resilience of its customer base will prevent any major sales drop-off.
A possible buying opportunity for JD Sports shares.