Shares in JD Sports Fashion PLC (LSE:JD.) fell 2.4% in London trading on Monday after rival trainer retailer Footasylum unveiled a record financial performance that underscored mounting competition on the high street.
The drop came as investors reacted to Footasylum’s annual results, which highlighted strong demand among younger shoppers despite a challenging economic backdrop.
This was in stark contrast to JD's recent updates, which showed the group struggling against consumer and wage headwinds as well as problems at Nike, its leading brand supplier.
Footasylum, the Rochdale-based chain with around 60 UK stores, reported revenues of £350 million for the year to 31 January, a 9% increase on the prior period.
Pre-tax profit almost tripled to £17.2 million, up from £6 million a year earlier, driven by growth in both store and online sales and a doubling of revenues from its exclusive brands.
“Our brand recognition, particularly among our core 16–24 demographic, continues to grow, supported by our distinctive content and social strategy,” said David Pujolar, Footasylum’s chief executive.
That's exactly JD's demographic and shows a worrying upsurge in competition.
Moreover, since the start of the current financial year in February, sales of the retailer’s private-label products have surged a further 17%, while overall revenues have climbed by more than 10%.
Footasylum identified Generation Z shoppers, who typically prioritise fashion, embrace new trends and shop heavily online, as its key customer base, and noted particularly strong demand in its junior and nursery ranges.
The retailer also highlighted that its partnerships with global brands such as Nike, Adidas and New Balance were “going from strength to strength,” reinforcing its appeal to younger consumers and intensifying pressure on larger competitors like JD Sports.
The reference to Nike will likely stick in the craw of JD management, which has found the relationship anything but easy over recent months as the sports shoe maker has struggled with strategic missteps such as an overreliance on retro product lines.
JD shares were off 2.06p on Monday at 87.98p and have fallen 23% in the last year.