Profits margins in 2023: how did major companies such as JD Sports and Next do in the year 2023?

The last year has proved to be tumultuous for companies as some stores report record highs whilst others reveal revenue growth lower than expected.

However, JD Sports has reported a loss of more than a fifth of its stock market value after it reduced its full-year profit forecast. Previously, the sportswear company estimated a £1.04bn profit for the period. But now reveals it is expecting a profit before tax and adjusted items of between £915m and £935m in 2023/24.

Shares plummeted to 23% on Thursday (4 January) morning and were at a similar at lunchtime. JD Sports blamed higher costs and weaker demand from "more cautious" shoppers, as well as "milder weather" from the second half of September also having an impact on sales.

The retailer reported like-for-like organic revenue growth of 1.8% in the 22 weeks to the end of December, which it said was "slightly behind our expectations" but it expects full-year organic revenue growth to be around 8%, compared with the 12% last year.

JD Sports chief executive Regis Schultz said the chain had still made "good progress" and had opened more than 200 new stores in the last year.

He added: "Our key markets have seen increased promotional activity during the peak trading season, driven by a more cautious consumer, but we continue to grow market share. We are confident in our strategy and we continue to invest in our supply chain, systems and stores, supported by our strong cash generation and healthy balance sheet."

However, JD Sports was not the only sportswear brand to see shares fall. Sportswear peers Frasers Group, which owns Sports Direct, Adidas and Puma also fell between 1% and 5%, and US sports brands and retailers, with Nike down 1.5% and Foot Locker falling 1.4% in pre-market trading.

However, in contrast, Next has raised its profit forecast for the fifth time in less than a year as it reported better-than-expected sales in the run-up to Christmas.

Next said full-price sales were up 5.7% in the nine weeks to 30 December compared to last year, and in an update from the high street retailer, it is doing £38m better than the 2% rise it previously forecast for the period.

Now, Next is upgrading its pre-tax profit guidance for 2023/24, not including exceptional items, by £20m to £905m, representing a 4% rise on the £870m it made in 2022/23. Next said it expects full-price sales to rise 2.5% in 2024/25, and pre-tax profit to increase by 5%.

The company reported particularly strong website sales, which increased 9.1% in the nine weeks to the end of last month.