JD Sports profits tumble by two-thirds after Nike’s worst sales slump since pandemic
THE boss of JD Sports yesterday bristled at concerns the retailer was vulnerable to a slowdown in sales at supplier NIKE.
JD Sports — known as the King of Trainers — relies heavily on the popularity of new releases from the world’s biggest sporting brand to bring in customers.
Nike’s sales slumped by ten per cent in the last quarter and the US firm’s profits were down more than a quarter to $1.1billion — the biggest fall since the pandemic.
Meanwhile JD Sports yesterday posted a 64 per cent drop in profits to £126.3million.
Regis Schultz, chief executive of the FTSE 100 retailer, accused journalists of “overplaying” the group’s exposure to Nike’s woes.
But he later admitted Nike’s Air Force One was still a best-seller.
A testy Mr Schultz insisted: “People overplay everything . . . we are a multi-brand retailer. We are doing what we do for a living, selling different brands.”
Asked about when he hoped Nike would be restored to full strength he said: “I think the demand is there so it will come.”
Nike has delayed investor meetings to give new boss Elliott Hill more time to turn things around.
Nike’s fall from favour comes amid rising competition from running shoe brands Hoka and ON while rival Adidas has been basking in the Samba and Gazelle trainer revival.
Nike’s finance chief said the company will be spending more in a bid to win back a share of the running market.
While JD Sports’ overall sales rose by 5.2 per cent in the 26 weeks to August this overwhelmingly came from new shops and acquisitions.
Sales at stores open for more than a year slowed to 0.7 per cent, despite higher prices.
Shares fell by 6 per cent to 140.35p yesterday, suggesting the City was not convinced by Mr Schultz’s claims that “everything is good” with the company.
In the UK, sales fell by 4.6 per cent to £1.2billion, which JD Sports blamed on an early Easter and an “unfavourable spring and early summer weather” which the firm said “dampened footfall and full-price demand” meaning shops had to discount more.
JD also said the Euros footie tournament had a negative impact on profits because selling replica kit has lower margins than its usual athleisure.
The drop in profits came after JD shut a warehouse in Derby. It also warned of a £20million hit from foreign exchange costs as a result of a stronger pound.
Top-line operating profits were 6.7 per cent higher at £451million.
Thames’ deadline extended
THAMES WATER has received some much-needed breathing space after its banks agreed to extend an overdraft facility that was due to expire next week.
Sources told The Sun that a £530million revolving credit facility had been extended by lenders ahead of a deadline next Monday.
It comes as a group of 90 creditors, including big fund names Blackrock and Apollo, are working on a rescue plan for the troubled firm.
It would restructure £16billion of its debts — but only if another infrastructure investor can be persuaded to inject fresh cash, and regulator Ofwat signs off on plans to raise customer bills.
Despite the credit extension, Thames Water is still racing against the clock as it has warned it will run out of cash.
A failure would mean it is taken into temporary state ownership — via a special administration regime to ensure that household services are still supplied.
Starling's startling criminal risk
DIGITAL start-up Starling Bank has been fined £29million over “shockingly lax” failures on screening potential criminals as clients.
The financial watchdog issued the penalty yesterday, saying breaches of money-laundering rules had “left the system wide open to criminals”.
Starling’s customer numbers swelled from 43,000 in 2017 to 3.6million in 2023 — and the Financial Conduct Authority says it did not keep its checks up to pace.
The bank’s rapid growth came after it took advantage of state-backed Covid bounceback loans, boosting its uptake in new customers.
But figures released last year showed that almost half of the £1.6billion in loans supported by the taxpayer were overdue, or had been written off.
The FCA’s investigation found that Starling had opened 54,359 accounts for “high-risk customers” since 2021 and that its screening process covered only a “fraction” of clients and accounts it should have.
Starling could have faced a higher £41million fine, but got a 30 per cent reduction for taking the blame and pledging to overhaul its processes.
The bank said it “regrets and apologises for shortcomings” and said these were “historic issues”.
David Sproul, Starling’s chairman, said the bank had “invested heavily to put things right, including strengthening our board governance and capabilities”.
Time for a cheque
BANKS could delay payments for up to three days in plans to help them investigate fraud.
The Government will argue today that upping the stalling time from 24 to 72 hours will allow for more time to block high-risk payments.
Some £460million last year was lost as fraudsters tricked people into giving them money, according to UK Finance.
City Minister Tulip Siddiq said: “We need to protect these people better.”
AO nicks Magpie
ONLINE retailer AO World has swooped in on second-hand deals platform musicmagpie for just £10million.
musicMagpie, which gives customers cash for old phones and gadgets, had floated on the London stock market for £208million in 2021 — but a string of profit warnings had knocked the business hard.
The takeover excited AO World investors, with its shares up by 50.6 per cent.
AO World boss John Roberts said the deal could help the firm move into selling second-hand technology.
World of chaos
GEOPOLITICAL instability is the top threat to the financial system, according to a Bank of England poll of banks and investment firms.
Even before the latest escalation of conflict in the Middle East, a record 93 per cent named geopolitics as the No1 risk. Close behind were cyber attacks and a UK economic slowdown.
The Bank’s Financial Policy Committee warned stock markets could see a “sharp correction”, with risk for hedge funds increasing their bets on US government debt.
SHARES in Saga lifted almost 10 per cent yesterday after the over-50s group confirmed it was in partnership talks with Belgian insurance rival Ageas.
A tie-up could include an upfront payment which would help cut Saga’s debt pile.