JD Sports shares dive after warning

Investors in John David Sports, which only joined the market last year, lost heavily yesterday after the sportswear retailer said some of its products were not selling as well as expected, slowing sales growth. The share price, which has recently been as high as 366.5p, dived to an all-time low with a drop of 59p to 271p.

The warning about trading accompanied news that profits for the year to 31 March had soared by 43 per cent to pounds 9.62m, which was ahead of the top range of analysts' expectations of pounds 9.4m.

However, John Wardle, chairman, said: "It has become apparent that a segment of the company's clothing offering is not selling well. Action has been taken to address this ... which will act as a brake on margins."

The warning comes amid growing demand for sports clothing, particularly among young people for football and other sports shirts. High-profile sports events like last year's Euro 96 soccer championship have helped lift demand and forced even conservative clothing retailers like Marks & Spencer to introduce sportswear lines.

JD Sports said sales in the 1996/97 year rose 56 per cent, with sales at stores open more than a year up 15 per cent. Sales in the second half of the year "returned to more modest levels" after Euro 96 and the Atlanta Olympic games had pushed up demand in the first six months.

Sales so far this financial year are up 25 per cent on the same period a year ago, mainly reflecting an increase in the number of stores. In 1996/96, the company opened 34 stores.

The cost of the rapid store opening programme impacted on operating profit margins, which fell from 12.4 to 11.1 per cent. The company also took an exceptional charge of pounds 650,000 to cover costs of damage to one of its stores in Manchester caused by the IRA bomb attack.