JD Sports shares slump on fears US price hikes could hit demand

(Sharecast News) - Shares in JD Sports slumped on Wednesday as it warned that US demand could be hit with customers facing higher prices due to US President Donald Trump's tariff polices and revealed a 2% fall in underlying sales amid a "volatile" market. The company said it was taking action to mitigate any potential impact from tariffs through further diversifying the range of countries from which it sourced own brand and licensed products, and ongoing cost control.

It added that the biggest potential impact would be a rise in the price of products for consumers which could impact demand and dent confidence. Shares in the firm were down 7% in early London trade.

Trump's tariffs plan, which includes a blanket 10% levy on all US imports, could mean the "cost of goods and services for US customers may rise to some degree".

It came as the retailer said overall sales are being affected by "slower" conditions in many markets. Organic sales grew by 3.1% in the quarter to May 1 as new openings offset the 2% decline in like-for-like sales.

In North America, organic sales were 1.4% higher but the company saw like-for-like sales fall 5.5% due to pressure on consumer confidence. Meanwhile, organic sales grew by 6.5% in Europe as the retailer said good weather conditions helped to drive revenue in the UK.

"The market remains volatile and visibility on the overall potential impact from tariffs is low," said chief executive Regis Schultz.

JD Sports also reported a 4% fall in full-year profit before tax and adjusting items to £923m, in line with January guidance of £915m to £935m. On a reported basis, earnings fell 11.8% for the year to February 1 to £715m. Revenue rose 8.7% to £11.45bn.

The company is up against a highly-competitive promotional market and a steep fall in demand for Nike products, which account for 45% of its sales.

AJ Bell investment director Russ Mould said: "JD Sports has been given a right kicking by the market after a weak start to its new financial year and warning that tariffs could hit demand."

"Approximately 40% of JD's sales come from the US and many products it sells are sourced from Asia, so it is in the firing line for tariffs. That means prices will inevitably go up and not all consumers will have the appetite or means by which to stomach these extra costs. They'll simply make existing footwear last longer or opt for cheaper items."

"JD has thrived on consumers' willingness to load up on the latest footwear, with many people viewing trainers and sneakers as collectables rather than functional items. It has also capitalised on the athleisure boom, selling a wide range of fitness clothing to the mass market. There is a risk both of these trends run out of steam or at least go through a temporary moment of weakness as individuals reassess their spending choices."

Reporting by Frank Prenesti for Sharecast.com