JD Sports out of fashion as it signals margin pressure

Shares in JD Sports tanked on Thursday as the retailer hinted at margin pressure and said it was on track to meet market expectations for the full year.

In an AGM trading update, the company said growth to date in like-for-like store sales and further significant growth in online sales have been in line with its expectations.

However, JD said it was not providing like-for-like sales figures in this update, pointing to the timing of Eid and the strong CY2016 comparative, which was influenced by the European Championships.

"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."

JD continues to expand its store estate across the UK and overseas, with a net increase of 28 stores in the period to 24 June. It has opened two JD stores in Australia and another two in Malaysia.

Independent retail analyst Nick Bubb said: "The bears will seize on JD’s unwillingness to give any cumulative LFL sales figures".

Meanwhile, Shore Capital said the muted tone of the statement could weigh on the shares in the near term, but ultimately, it reckons the company has a compelling proposition, with trading still in line with market expectations.

"Observers of the stock will have noticed recent share price weakness amid a possible Amazon/Nike deal, impacting the valuations of a variety of sports apparel retailers. JD at this moment in time continues to be a preferred retailer for premium branded sportswear."

At 0930 BST, the shares were down 10% to 359.80p.