How JD Sports boss Régis Schultz plans to kick on despite sluggish sportswear growth

As JD Sports warned of “cautious” consumer spending and a peak trading season “softer” than anticipated at the start of the year, it issued an earnings warning reducing profit expectations to between £915m and £935m compared with the previously pledged £1.04bn. 

In its latest trading update, JD Sports delivered marginal sales growth of 0.1% on a like-for-like basis in its fourth quarter while full-year like-for-like sales and organic sales improved 4.2% and 8.4%, respectively.

Despite missing out on its ambitious target of becoming a £1bn profit business, set out at the company’s capital markets event earlier last year, chief executive Régis Schultz remains confident of JD’s execution even as the retailer embraces a tough first half of trading.

Schultz said: “We were pleased to say that we have ended the year as we guided in January, with a profit before tax between £915m to £935m.  

“I think the great thing is that we outperformed the market again in the full year of 2024 with over 8% organic growth, 4% like-for-like and a double-digit growth of 10% in our athletic leisure market.

“So we believe the market has been around 3% to 4% growth; we delivered a little bit more than two times that.”

Felled by giants

Despite outgrowing the sportswear market for FY24, JD’s Schultz has blamed the retailer’s current issues on what was once seen as its biggest strength: its close relationship with category brand giants such as Nike and Adidas. 

Schultz says the slowdown in the sportswear market is down, at least in part, to a lack of product innovation on the side of these giant brands. 

Nike reported marginal growth in sales to $12.4bn in its third quarter to February 2024. The global sportswear giant said it was “making necessary adjustments on Nike’s next chapter of growth” as it set out to “build a multi-year cycle of new innovation” and sharpen its brand storytelling.

Adidas posted flat sales in currency-neutral terms for the full year ending March 2024, which it said was “significantly above initial expectations” of a high single-digit decline as the global giant tackled high inventory levels and sold its remaining Yeezy stock at cost price to avoid racking up a significant loss.

Kate Calvert, analyst at Investec, said: “The whole sportswear market was on fire last year, particularly Nike, and you’ll see that from their numbers as well. 

“It is difficult out there due to a lack of innovation and a fair amount of promotional activity, particularly in the US where Nike and Adidas are still clearing out stock. And you have to keep in mind that the size of Nike is over half the market in terms of athleisure. 

“At the moment, the market is barely growing and hopefully the consumer will respond to the innovation that’s coming through from both Nike and Adidas as the year progresses. And, as the two largest and most dominant players in terms of the overall market, it’s quite important for them to perform.”

Schultz said JD had especially been affected by “a slowdown” in sales of some Nike products as the brand “didn’t bring enough new products” or “regenerate its range”.

He said: “But, at the same time, Adidas and New Balance are doing very well. I think it’s mainly around how you bring new colour and new silhouettes in order to give the consumer a reason to come in to buy a new product.”

Olympic hopes

As the sportswear segment begins to see the effect of inflationary pressures and reduced consumer spending, JD expects the first quarter of 2025 to be the softest like-for-like period of the year. 

However, the retailer said it expects the second half to be stronger than the first half with full-year profit before tax expected to be in the range of £955m and £1.35bn. 

While JD Sports has been affected by the sluggish wider sportswear market, Schultz is looking ahead to the rest of the year with cautious optimism – particularly towards the Summer Olympic Games and the interest in the category such events always generate. 

Schultz said: “Next year, we are looking at a weaker first quarter as we have very a huge comparative from last year, when we delivered 14% [in sales] and we have a weak product innovation, as mentioned, by Nike.

“So we believe that Q2, and especially the second half of the year, should see some innovation coming and we should benefit from the big sporting events that will happen this summer with the Euros and the Olympic Games.”

As JD Sports gears towards a period of tough trading, Schultz remains confident in the retailer’s strong proposition, foothold and execution in key geographical territories as it sits tight in the hope of better market conditions, product innovation and a boost from the upcoming Olympics.