JD Sports Fashion PLC's (LSE:JD) third-quarter trading update was a mixed bag, analysts said, with a stronger-than-expected showing in North America helping offset ongoing weakness in footwear and soft UK demand.
Group guidance for full-year profit before tax and adjusting items was trimmed to the lower end of expectations as group like-for-like sales fell 1.7% in the 13 weeks to 1 November.
But, this was an improvement on the 3% decline in the first half and better than the 2$ decline that analysts expected.
UBS said the results were ahead of its forecasts and the City consensus, highlighting North America stood out as "a positive surprise, well above buy-side expectations, based on our investor conversations", where LFL sales of -2% beat their estimate of -3%.
Controlled pricing online pushed gross margins down by 30 basis points year-on-year.
The UK and Europe were broadly in line with expectations, with footwear still facing headwinds from the end of popular product cycles.
Deutsche Bank said the regional breakdown was as expected, with the UK -3.3% and Europe -1.1%. Apparel performed better, and while footwear remains soft, running shoes were a relative bright spot.
Analysts at the German bank said the lowered guidance reflects macroeconomic caution, including concerns about youth unemployment, but expected only a limited share price reaction given the trading update was not materially worse than expected.
Panmure Liberum struck a more downbeat tone, describing the quarter as “another tough trading period”.
Although overall results were in line, the broker warned that US low-income consumers are showing signs of strain, with its Complementary Concepts segment, consisting of sports fashion and community-focused brands, slipping into negative territory.
Based on this, the Panmure analysts "worry that the impact of the weaker US lower-income consumer will continue getting reflected in weaker trading here".
All three sets of analysts noted that the updated full-year guidance now implies a 1.5-2.0% downgrade to profit forecasts, and that investor attention will now turn to the crucial peak trading period in Q4.