“KING of Trainers” JD Sports, once the powerhouse in sportswear, faced a devastating blow as its shares plummeted by 23% following a surprise profit warning. The market reacted swiftly, wiping almost £1.7 billion off the company’s value, leaving JD Sports valued at £6.2 billion.
The Unexpected Setback
JD Sports had emerged as one of the strongest names in retail in the UK. However, a combination of “more cautious consumer spending” and a mild autumn season resulted in dampened demand for its products. The company reported a modest increase in total sales by 6% and a meager 1.8% rise in like-for-like sales during the 22 weeks leading up to December 30. This underwhelming performance led JD Sports to lower its profit expectations by 10% to £915 million – £935 million.
An Unpredictable Market
Before the holiday season, JD Sports CEO Regis Schultz had expressed optimism, citing the younger demographic’s disposable income and their willingness to spend on trainers. However, an unexpected shift in consumer behavior and the weather conditions challenged this sentiment, leaving the company to grapple with the consequences.
It’s worth mentioning that this update comes in the wake of the recent Christmas ad featuring Lioness Ella Toone, which seemingly failed to make the desired impact on sales.
Next to Nothing
In a contrasting turn of events, fashion retailer Next had reason to celebrate as it reported positive results. The company, which now encompasses brands like Joules, FatFace, and Reiss, has committed to keeping prices stable this year due to reduced factory costs. Next’s CEO, Lord Wolfson, attributed the positive outlook to falling prices, which would have benefited consumers if not for increased staffing costs resulting from the living wage hike. Next’s full-priced sales increased by 9.1% in the last quarter of 2023, setting a positive tone for the brand.
Charging Ahead
Car industry leaders have expressed concern over the insufficient number of public charging points in the North, claiming it hampers the transition to electric vehicles. However, there has been a general improvement as supply issues have eased, resulting in 1.9 million new cars hitting the road, an 18% increase from the previous year. Companies like Ford, with its all-electric version of the popular Puma, are spearheading the drive towards electric mobility. The CEO of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes, has urged the government to reduce VAT on electric vehicles for three years, aiming to encourage more drivers to make the switch.
Boots on the Table
Walgreens Boots Alliance, the owner of Boots, is considering a potential stock market listing, revealing that “everything’s on the table.” The company experienced a 9.8% rise in sales during the Christmas period, driven by record-breaking Black Friday sales. With the aim of honing its focus on the US market, the company is exploring the possibility of a £7 billion flotation of Boots.
All Guns Blazing for BAE
BAE, a prominent British defense firm, has signed a £39 million contract with the US Army to restart the production of its M777 guns. This decision comes in the aftermath of Ukraine’s effective deployment of the howitzers against Russian forces. By refurbishing guns used by Ukrainian troops and subsequently fulfilling new orders, BAE aims to support its allies during these challenging times.
Pay Rise for Sainsbury’s Staff
Sainsbury’s has announced a pay increase for its 120,000 employees. Starting from March, workers will receive £12 per hour, with London-based employees earning £13.15 per hour. This 9% pay rise will cost the supermarket chain approximately £200 million.
Rate War by Home Lenders
Anticipating a potential interest rate cut by the Bank of England in the upcoming spring, lenders like Halifax and HSBC have engaged in a price war, triggering the availability of cheaper mortgage options. The increased confidence in rate reductions has led to a welcome surge in home loan approvals, reaching 50,067 in November. Economists predict that a drop in inflation to 2% by May will prompt the central bank to consider interest rate cuts.
These are some of the major stories impacting the business landscape today. Stay tuned for more updates from F5 Magazine.
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