The recent profit warning from JD Sports Fashion was especially painful. It raised questions about the relatively new management team’s ability to see challenges coming and suggested that the group was more vulnerable to economic turmoil than the market had believed. Being heavily dependent on Christmas and on weather conditions and being susceptible to competitors’ discounting were supposed to be other retailers’ problems.
This month’s wake-up call has left investors fearing the worst and adjusting their expectations. It’s tempting to view sell-offs induced by profit warnings as an attractive time to buy, but often they are not. When companies start delivering bad news, it’s usually followed by more of the same.
The present economic environment dispels hope of a quick turnaround. Many of the issues
