UK's JD Sports downgrades annual profit

By Sarah Young

LONDON (Reuters) -British sportswear retailer JD Sports Fashion downgraded its profit forecast after weaker trading in Britain and the United States and promotional activity at competitors hurt sales, and it warned the outlook was "cautious".

Shares in JD plunged 12% in early deals to a near five-year low of 84 pence.

JD Sports, which has over 4,500 stores globally, said underlying revenue fell 1.5% in November and December in what it called a "challenging and volatile market".

It cut its profit forecast by as much as 40 million pounds ($48.9 million), or 4%.

The stock had already lost 27% of its value in the last three months on worries about consumer spending and amid a downturn in demand for Nike products, which account for about 45% of JD's sales.

"Market headwinds were higher than we anticipated," Chief Executive Régis Schultz said in a statement on Tuesday. "With these trading conditions expected to continue, we are taking a cautious view of the new financial year."

Peel Hunt analysts said JD's strategy of not discounting to match competitors was the right one.

"The long-term strategy is correct, and JD will continue to lead the market, but we must rein in short-term hopes," they said, adding that JD will benefit from any recovery at Nike.

Nike has warned its turnaround will be a slog after it lost ground in recent years to rivals, including Roger Federer-backed On and Deckers' Hoka, which have lured consumers with fresher and more innovative styles.

JD said while trading during December was stronger, November dragged, and for the 12 months to the beginning of February it expected pretax profit before adjusted items to come in between 915 million and 935 million pounds.

Its previous lower end of guidance had been 955 million pounds. It made 917.2 million pounds in its 2023/24 year.

($1 = 0.8187 pounds)

($1 = 0.8189 pounds)

(Reporting by Sarah Young, Editing by Paul Sandle)