JD Sports profits warning as Frasers boosts Overgate – Daily Business

JD Sports Fashion, the leisurewear group, has issued a profits warning after its second quarter sales took another downward turn.

Group organic sales declined 1.3% in the period, a worsening from the previous quarter’s 0.1% decrease, with like-for-like sales down 3.1%.

UK sales fell 0.2%, North America experienced a significant 4.5% organic sales drop, while Europe saw a 0.4% decline, though Asia Pacific grew by 10.2%.

Consequently, the company has revised its full-year profit before tax and adjusting items guidance downwards to £700 million to £800 million, from £750 million to £850 million, but maintains its free cash flow forecast of £460 million to £520 million.

Régis Schultz, CEO, said: “Trading in the second quarter remained tough. The market stayed highly promotional, reflecting the consumer and footwear product cycle headwinds our industry has faced in recent quarters, whilst our core consumer was impacted by incremental cost-of-living pressures.

“We continue to exercise strong cost and capital discipline across discretionary spend, store operating costs, inventory and capex, while also driving further supply chain efficiencies, including automation at our distribution centre in Europe.

“Our guidance reflects a pragmatic view of external market conditions, whilst our cost and capital discipline, coupled with the highly cash-generative nature of our model, keep us on track to deliver unchanged free cash flow of £460m to £520m. We remain confident in our long-term strategy and my thanks go to our colleagues worldwide for their continued hard work and focus.”

Overgate thriving

The “Frasers effect” continues to drive a sharp rise in footfall and occupancy at the Overgate Shopping Centre in Dundee.

Trade has improved since the Sports Direct owner acquired the mall in March 2023 and in its third update this year it said the mall has seen a 7% increase in shoppers and a 26% uplift in sales over the past year.

More brands have been drawn to the refurbished 440,000 sq ft mall, and the occupancy figure has been at 90% since the start of the year.

When Frasers opened its 60,000 sq ft store over three floors in June last year it was one of the largest shop fit-outs Dundee has seen, revitalising Overgate and creating over 80 jobs.

It opened a 5,000 sq ft Flannels in December and it will be opening its Everlast concept gym in 2027 to further strengthen the leisure offer within Overgate and bring occupancy up to 96%.

Malcolm Angus, centre manager, said: “The opening of Frasers has been a breath of fresh air for the centre and reflects Frasers Group’s continued investment in the high street.

“Sales have been strong and Frasers has found a sweet spot in the market when it comes to the fashion and sportswear brands people desire.

“Its arrival has been good for attracting new retailers to open in Overgate – but also for existing tenants too, many of whom have undertaken store extensions and refurbishments. The centre now has a strong retail mix and demand for units is high.”

Reflecting on the first anniversary of Frasers Dundee, Lauren Barrie, chief retail officer at Frasers Group, said: “We are always looking for new and innovative ways to inspire our customers and create standout shopping experiences.

“We are proud to be a part of shaping the future of Dundee’s retail landscape.”

The impact can also be felt more generally across the city with business leaders acknowledging its positive economic impact. Dundee City Council leader, Mark Flynn added: “I am impressed by the boost to the local economy that has been provided by Overgate in the last year through increased footfall and sales.

“The council and its partners are working hard to make Dundee city centre an attractive place to visit and to spend time in. This is not a short-term task, as our City Centre Strategic Investment Plan recognises with its ambitious 30-year goals.

“I am pleased to see that we are already making progress. As well as the changes at Overgate, this can be seen through projects like the transformation of Union Street into an attractive pedestrianised space.”