JD Sports Fashion Plc admitted at its annual general meeting with shareholders that there has been some softening in its business in the North American market.
The UK-based athletic retailer said at the meeting Tuesday that the softening was “consistent” with other businesses in the sector and that inventories are at “normal levels” in the region. JD also maintained to shareholders that the company will not implement an aggressive promotional strategy in the region and will opt to remain competitive.
Despite the slowdown in business in the U.S., overall, JD Sports is optimistic about its business and reiterated its forecasts for pretax profit of about 1.04 billion pounds ($1.33 billion, based on current exchange) this fiscal year.
The company told its shareholders that it is “pleased to advise” that there was further positive trading in all regions through May with overall growth in organic sales at constant exchange rates in the month of around 8 percent. This moderation in growth was in line with management expectations and reflects tougher comparatives in the prior year as the supply chain normalized and the availability of product improved, JD said.
The positive trends have continued through June in the Group’s businesses in the UK, Europe and Asia Pacific although the growth from these regions is partially offset by the businesses in North America.
In May, JD Sports released its final results for the full fiscal year 2023. According to the retailer, it recorded pretax profit for the year of 991.4 million pounds ($1.26 billion), a new record for the company. Also at the time of this announcement, JD advised that it was “reassured” with trading in the first three months of the year with growth in organic sales at constant exchange rates of more than 15 percent.
According to the company, it’s moving full steam ahead on its “JD First” and global growth strategy. JD said that it has opened a net additional 32 JD stores in the first four months of the year and is on track to open more than 150 stores for the JD fascia over the course of the year in line with targets.
At the group’s capital markets day in February, JD set out its growth strategy and key objectives for the next five years, which include significant expansion of the JD brand internationally, notably in North America and Europe, and continued growth of the JD apparel business.
Also at the event, Régis Schultz, who took over as CEO in September, said the company would spend 500 million to 600 million pounds annually, with over half of that allocated to adding between 250 to 350 new stores in underpenetrated markets per year. The CEO added that the goal is to open as many as 1,750 stores over the next five years.
“We see significant growth opportunities ahead by expanding JD internationally, notably in North America and Europe,” Schultz said in the statement at the time.
Elsewhere, the company still anticipates that the proposed acquisition of the complementary Courir business in Europe, which represents its first acquisitive steps in fulfilling the growth ambitions of the business in underpenetrated markets, will formally close later in the year. The mandatory consultation process with the Courir works council has now completed with good progress being made on the preparation of the mandatory anti-trust submission, JD noted.
In December, JD Sports sold 15 of its U.K.-based “non-core” fashion businesses to Frasers Group Plc in a deal worth 47.5 million pounds, or $57.6 million based on current exchange rates.
