JD Sports says Iran war could hit consumer spending and raise prices

The sports fashion retailer JD has warned that profits will fall this year amid a “muted market” hit by weaker spending by young people and concerns about the Middle East conflict.The company, which runs 4,800 stores worldwide including the JD, Blacks and Millets chains in the UK, said it expected profits of between £750m and £850m in the year ahead, after reporting £852m in the year to the end of January.JD said there had been “no material business impact to date” from the conflict in the Middle East, where it operates a small number of stores through franchise agreements.However, it said that the Iran war could push up costs and prices. It said: “Over time, the potential future impacts of heightened uncertainty may contribute to direct cost pressures, including energy and fuel costs across our store and logistics networks, respectively, as well as potential indirect impacts on pricing and consumer demand should input cost inflation emerge.”JD does not expect an increase in sales this year, excluding the impact of acquisitions, after recording flat sales in the three months to the end of April. That came after an increase of 2.1% in the year to January to £12.66bn.The UK was the worst-performing market in the year, with sales down 2.5%, offset by growth elsewhere in Europe and the US.JD said cold and wet weather since the end of the financial year had dampened sales and that trading in April had been “volatile”, with a strong Easter performance followed by fewer visitors to shops.Régis Schultz, the retail group’s chief executive, said: “While we continue to expect muted market growth in [2027], we remain confident in JD Group’s medium‑term trajectory, underpinned by our strong brand partnerships and agile, multibrand model.”Analysts at Peel Hunt said they were downgrading profit expectations for JD for the year ahead by 5% “given the uncertainty that prevails across the retail sector in general”.JD, which operates the Finish Line chain in the US and Sprinter in Spain also said sales were likely to be affected by “ongoing product cycle evolution at some of our major brand partners, particularly in footwear” – a reference to problems at Nike.Schultz said JD was aiming to use more automation and AI to improve the efficiency of its supply chain and choose the right product. It also indicated it would continue shifting towards fewer larger stores in the UK – where it closed 24 outlets in the past year but increased selling space by 4%.Shares in JD, which has partnerships with the boxer Anthony Joshua and the YouTuber Chunkz, rose almost 3% on Thursday morning.