LONDON (ShareCast) - (Sharecast News) - Shore Capital has cut its rating for JD Sports Fashion from 'buy' to 'hold', citing a tough athleisure market and weak consumer backdrop.
The downgrade came after last week's third-quarter trading update from the sports apparel and footwear retailer, which "underscored the depth of the current trading headwinds", according to Shore Capital.

New store openings and refreshes were supporting headline revenue growth - total third-quarter sales were up 8.1% at constant currency - though like-for-like sales were down 1.7%, falling across three of its four major regions.

As such, the company guided to full-year pre-tax profits at the lower end of the £853mm-888m consensus range.

"The lack of LFL momentum is limiting the group's ability to extract operating efficiencies and as labour and operating costs rise the company is also experiencing margin contraction," Shore Capital said.

"While the valuation for JD remains highly attractive, particularly from a cash generation and returns perspective, given another cut to our forecasts, we today cut our outlook to Hold until we have clearer visibility around a return to a more stable and then, hopefully, positive earnings trajectory."

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