By Sarah Young
LONDON (Reuters) -JD Sports Fashion said there had been some softening in trade in its North American business in June, which would be offset by growth in demand for its trendy trainers and sportswear in the UK, Europe and Asia Pacific.
Despite the slowdown in its U.S. and Canadian markets, the British retailer stuck to forecasts for pretax profit to come in at about 1.04 billion pounds ($1.32 billion) for the 12 months to the end of January.
JD Sports’ noted competitors in North America were seeing a similar trend. In May, Foot Locker Inc downgraded its outlook amid a sharp drop in demand as U.S. consumers cut back on discretionary spend.
Trading from about 3,400 stores in 32 countries, JD has been expanding rapidly, boosted by appetite from young adult shoppers who are less affected by rising bills and who seek out JD for special access to Nike and Adidas products.
The U.S. warning sent shares in the FTSE 100-listed company down 4.5% to 139.6 pence in early trading but Peel Hunt analysts said the stock was undervalued. Shares in JD are up 16% so far this year.
“The U.S. performance will probably catch the headlines but Europe and the UK are in rude health and have picked up any bottom-line slack,” the analysts said.
Across JD Sport’s wider business, organic sales growth at constant exchange rates moderated to around 8% for May from the 15% growth it reported for the first three months of its financial year, in line with its expectations.
In its North American business, JD said inventories were at normal levels and it would not be more promotional than it needed to be.
($1 = 0.7849 pounds)
(Reporting by Sarah Young; editing by James Davey and Louise Heavens)
