A drop in sales across the branded menswear market could take its toll on JD Sports Fashion despite the company announcing a rise in sales last year.
The retail chain announced that operating profit slumped by almost 20% last year, with losses at Blacks Leisure dragging down an otherwise strong 12 months.
Revenues rose to £1.26bn for the 53 weeks to February 2 as like-for-like sales across the group’s retail fascias rose 1.2%.
However this year like-for-like sales have seen a slowdown showing just 0.5% growth in the nine weeks to April 6. Fashion sales fuelled the drop with sales falling 6.2%, while revenues across the sports fascias have grown 1.9%.
Drapers last week reported that spend among under-25s has fallen as buying habits shift towards cheaper own-label alternatives and Ian Mitchell, strategic insight director at Kantar Worldpanel, said JD could be impacted by this.
“JD Sports will have been impacted by a 10% year-on-year sales decline of the men’s branded sports clothing market, as men’s clothing makes up about a third of its business,”he said. “JD Sports customers are now switching some of their spend to own label retailers such as Primark and Topman.”
He added: “Shoppers aged under 25 have reduced their spend in sports shops by 16% in the past year and this will have taken its toll on the retailer as nearly 40% of its customers are in this age group.”
Meanwhile other analysts praised the young fashion business’ latest figures.
Dan Coen, director at advisory and restructuring firm Zolfo Cooper, said: “Today’s JD Sports results may not be top of the league table, but the sports fashion group is rightfully persevering with a bullish growth strategy. Last year’s acquisition of Blacks Leisure continues to weigh down on the group’s overall performance but restructuring of the outdoor arm is due to start paying off this year.”
JD’s international expansion and brand acquisitions such as footwear etailer Cloggs could give the business a well-needed fillip.
“These international and multichannel developments mean that JD Sports will be set for success and chief rival, Sports Direct, will have a fight on its hands for sports supremacy,” Coen added.