Shares in JD Sports plummeted this morning even though the retailer said store and online sales were rising as expected and full-year results were in line with forecasts.
Investors were probably spooked by JD Sports’ admission that pressure on margins had risen over the past year.
The retailer, which last year was exposed over poor treatment of its workers, also said that like-for-like comparative sales would be affected by the timing of Eid and fewer sport tournaments.
Shares fall: Investors were spooked by JD Sports’ admission that pressure on margins has risen
The trading update sent shares in the group down more than 10 per cent at the open. They recovered slightly in the afternoon, trading 6.4 per cent, or 25.6p lower, at 372p.
JD Sports executive chairman Peter Cowgill said: ‘Since we reported our results for the last financial year, we have moved into a further period of year on year calendar differences, notably Eid, which has also led us to adjust the timing of our clearance period.’
‘Therefore, we do not believe our like for like store sales comparatives will be truly meaningful until the end of the first half, by which point the impact of the aforementioned timing differences and the strong comparatives from the performance through last year’s Euros tournament will all have fully unwound.’
He added that the group had seen ‘further significant growth’ in online sales.
JD Sports said it continues to expand across the UK and overseas, with a net increase of 28 stores in the period to June 24, including its first JD stores in Australia and Malaysia.
In April, the firm reported a record set of annual results, managing to achieve an 81 per cent rise in profits versus last year.
JD Sports’ continued strong performance comes at a time when many high street retailers are struggling with falling sales, as consumers’ spending power is reduced by a mixture of rising inflation and stagnant wages.
Jonathan Pritchard, analyst at Peel Hunt, said: ‘Expectations have mostly caught up with reality, but the fact that forecasts have precisely doubled in the last two years, an extraordinary run, made that certain to happen at some stage.’
A report by Channel 4 last year showed staff at its Rochdale distribution centre being told they could be sacked for sitting down, that the company operated a ‘three strikes and you’re out’ firing policy and that offences that could lead to sacking included chewing gum or wearing the wrong clothes.